Dr. Rob Shapiro

Team NDN Quotes in Major Newspapers on the State of the Union

There's been a lot of buzz leading up to tonight's State of the Union, and we here at NDN are proud to be a part of this ongoing national discourse. 

Just today, NDN's Rob Shapiro was quoted in Ezra Klein's Washington Post column on competitiveness.  In this piece, Shapiro helps contextualize America's competition with China:

"China competes on price," says Robert Shapiro, director of Sonecon, an economic consulting firm. "There isn't any doubt about that. The United States competes on quality and innovation. That's how our companies outdo other companies."

Yesterday, Simon was quoted in The Financial Times, regarding President Obama's approach to the State of the Union:

“You will see a resurgent president,” said Simon Rosenberg, of NDN, a Democratic-aligned think-tank. “What America needs to do now is to create for itself a new strategy in a fundamentally changed world.”

And, in The Washington Times:

“The Republicans have an enormous burden to prove that cutting spending can actually create growth and prosperity,” said Simon Rosenberg, president and founder of NDN, a Democratic think tank. “I think the president is going to argue that the challenges are big and we need big solutions.”

NDN Fellows Mike Hais and Morley Winograd were also cited in USA Today, in a different story, about Baby Boomers hitting the big 6-5:

Both the millennials and the World War II generation are what New Democratic Network scholars and authors Michael Hais and Morley Winograd consider "civic generations," community-minded people seared by crisis and brought together by challenge.

For the World War II generation, it was the Depression and Pearl Harbor. For millennials, it was 9/11 and its aftermath.

Their Boomer parents, according to Hais, belong to a classic "ideological generation," one driven by "internal beliefs, which they try to enact on the rest of the world."

Boomers "tend to think that their experiences are unique," notes Hais, who is joining Winograd for a second book on millennials that is due out in September.

Predictably, there has been much discussion of "triangulation" - a term the press loves and Team Obama loathes.  Simon weighed in on the topic with The Nation:

"The concept of the third way or triangulation is that reasonable people from both sides can come together and strike a deal," says Simon Rosenberg, president of the New Democratic Network and a veteran of Clinton's war room in 1992. "And I think what we've learned in the last few years is that formula requires both sides to be reasonable. And we've discovered the Republicans are not."

Simon also spoke with Roll Call about the role of outside influencers on Congress:

“The ecosystem of each ideological movement within the political parties is much bigger than just the elected officials,” said Simon Rosenberg, a veteran of Bill Clinton’s White House who now leads the progressive group New Democrat Network.

Rosenberg identified religious groups, community organizations, labor unions and activist outlets such as MoveOn.org as holding more influence over the agenda. On the left, he sees MSNBC, progressive blogs and Stewart’s Comedy Central as dramatically changing the conversation in Washington, and he said their influence has increased in recent years.

Looking ahead on policy, Nelson Cunningham has co-authored an op-ed with Thomas "Mack" McLarty III in The Wall Street Journal regarding the forthcoming free trade agreements with South Korea, Colombia and Panama.  According to the authors:"A full-throated campaign for the Korea, Colombia and Panama trade agreements, along with WTO accession for Russia, can help reset the presidency."

It's already been a busy week here at NDN and we're all excited to see what tonight brings.

Wed AM Update - Simon has the following quote this morning in a front page Susan Page story in USA Today: 

"We're looking at a different phase of the Obama presidency," says Democratic analyst Simon Rosenberg, president of the think tank NDN. "It's a new strategy, a new team and a very different environment than he faced before. It is the second chapter of the administration."

President Obama, Senators Advance Payroll Tax Cut to Spur Job Creation

This week, President Obama and Senators Schumer and Hatch proposed important job creation ideas similar to those advocated by NDN and Dr. Robert Shapiro over the past several months. At the core of these proposals sit payroll tax cuts or tax credits that reduce the employer’s cost of hiring, which NDN has advocated as the most effective way to spur employment in the near-term. 

Dr. Robert Shapiro, Chair of NDN's Globalization Initiative and former Under Secretary of Commerce for Economic Affairs, said this about the White House and Schumer-Hatch proposals:

Reducing the cost to hire at a time when the economy is encountering special problems creating jobs simply makes good economic sense, and reducing the employer's payroll taxes on new hires, when the employer is also expanding its overall workforce, is the most effective way to do it.  The proposals advanced by the White House and Senators Schumer and Hatch do just that. NDN has long promoted versions of this approach, and while there are no silver bullets for unemployment, understanding the dynamics responsible for weak job creation now and throughout the 2002-2007 recovery is a necessary first step to restoring real prosperity. Taking targeted action now by reducing the payroll tax for new hires a vital next step.

NDN congratulates the Obama Administration and Senators Schumer and Hatch for offering this important proposal and will work for the rapid passage of this measure. For Shapiro's advocacy of such an approach, which dates back to October, please see:

  • January 20, 2010, The Path to More Jobs and Growth – "It’s virtually the only proposal that’s actually targeted directly at job creation, and it’s effective because it directly reduces a company’s cost to create new jobs. Its’ projected power to boost GDP follows directly from its success in creating jobs, since the new workers would spend virtually everything they earn, boosting output in the goods and services they choose and the jobs required to provide those goods and services." 
  • December 4, 2009, Video of the White House Forum on Jobs and Economic Growth: Encouraging Business Investment, Competitiveness and Job Creation working group in which Dr. Shapiro discusses this proposal. 
  • December 2, 2009, How to Create Jobs in a Troubled Economy"Exempt from payroll taxes the first $3,000 to $5,000 of wages paid in each of the first two years to new hires by firms that expand their work forces."
  • November 2, 2009, The Storms on the Economy’s Horizon"An even better idea would be to jumpstart new job creation by exempting the first few thousand dollars of wages from payroll taxes."

For more of NDN's work on the economy, please see our backgrounder on "A New Economic Strategy for America."

NDN Backgrounder: A New Economic Strategy for America

As national attention pivots toward the economy and employment, I'd like to present some some key analysis and narrative from NDN on the breakdown in job and wage creation in America:

  • Health Care's Raw Deal for Middle-Class Families by Dr. Robert J. Shapiro, 11/11/2009 - Shapiro argues that if the American middle class knew how adversely incomes were being impacted by health care costs, a political upheaval on the level of the 1970’s tax revolt might take place in America. This dynamic makes containing health care costs one of the great political and economic challenges of the day. 
  • Sifting Through the Economic Messages From the Elections Last Night by Simon Rosenberg, 11/4/2009 - Exit polls show that the most important factor to voters is the economy, as the old, 20th century economy is not working for everyday Americans anymore. To have electoral and governing success, policymakers must make a the creation of a new, 21st century economy their central focus. 
  • What Washington Should Understand and Do to Create Jobs by Dr. Robert J. Shapiro, 10/8/2009 - Even the term "jobless recovery" understates how dire America's economic situation is, as the economy now faces structural problems to create jobs and wage growth. With no silver bullet in sight, policymakers must set their sites on creating an agenda and conversation around long-term, broad based prosperity. 
  • The Key to the Fall Debate: Staying Focused on the Economy by Simon Rosenberg, 9/3/2009 - The summer months were not good ones for Democrats, but Rosenberg argues that there is a roadmap for how they can get back on track: staying relentlessly focused on the economy and the struggle of every day people.  
  • Noticing and Solving the Problem with Jobs and Wages by Dr. Robert Shapiro, 7/23/2009 - The ability of the American economy to create jobs and wage growth, even in times of productivity and GDP growth, has broken down. Policymakers must adjust to this new economic reality.
  • Not Taking the Presidential Eye Off the Economic Ball by Simon Rosenberg, 7/2/2009 - The economy is the singular dominant issue in American politics today, and the administration must craft a response to that, understanding that few want a recovery that takes America back to the Bush economy.
  • A Stimulus for the Long Run by Simon Rosenberg and Dr. Robert Shapiro, 11/14/2008 – This important essay lays out the now widely agreed-upon argument that the upcoming economic stimulus package must include investments in the basic elements of growth for the next decade, including elements that create a low-carbon, energy-efficient economy.
  • Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective.
  • Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay on the economic need to stabilize the housing market.
  • Poll: Economic Strategies and Globalization conducted by Pete Brodnitz, Benenson Strategy Group, 11/8/2007 - This poll of attitudes toward the economy and globalization found that Americans understand the modern nature of globalization, want government to give them the opportunity to succeed through investment, and believe innovation is a key strength of the American economy. Americans also saw the economy getting much worse, and they were right, as the recession officially began just a month later.
  • Voters Deliver a Mandate for a New Economic Strategy by Simon Rosenberg, 11/10/2006 - In analysis of exit polls from the 2006 elections, which chased Republicans from power, NDN argued that the most important factor, even in an election most thought was decided on the war in Iraq, was the economy. 
  • Meeting the Challenges of the 21st Century: Crafting a Better CAFTA by Simon Rosenberg, Dr. Robert Shapiro, and Joe Garcia, 6/9/2005 - NDN calls on policymakers to face squarely a vision of how globalization can and should work, and how rapid economic liberalization, generally a positive for America and the world, must be accompanied by a commensurate investment in the economic well-being of everyday Americans, who have not seen the expected wage gains despite strong productivity and GDP growth. 

On the Path Forward

This morning I reflected on the emerging economic debate.  In doing research over the past few days I was struck by this passage from a paper Dr. Rob Shapiro authored back in 2007, The New Landscape of Globalization: How America Can Reap Its Rewards and Reduce Its Costs, which I still feel is fresh and very pertinent: 

Where We Go from Here

We cannot entirely avoid these hidden costs of globalization, but we can outsmart and outrun them. There are many proposals to cushion their effects, through measures such as wage insurance. Those measures may help for a while, but by themselves they tacitly accept the underlying dynamics as inevitable and inalterable. A better approach focuses directly on affecting those dynamics. To begin, we will have to relieve some of the cost pressures on businesses, which in the more intensely-competitive environment of globalization hold down wages and job creation even as growth and productivity increase. Reforming our health care and energy practices, in short, is now the number one jobs and incomes issue, and one on which American workers and American businesses have real common cause. Both areas are already major public policy issues. Recognizing how the enormous increases in health care and energy costs of recent years directly and substantially affect wages and jobs should give greater sense of urgency to finally addressing both areas, in specific ways that will slow those increases.

In addition, we also should expand our public investments and other commitments in those areas in which American workers and businesses have advantages in the global economy. In an increasingly idea-based economy, the education of every American child should specifically include advanced skills in information technologies. Every child can and should have continuing access to a personal laptop computer in the school for 21st century instruction and at home for their homework. A recent proposal by Alec Ross of One Economy and NDN, "A Laptop in Every Backpack," is a sound and innovative start. Every worker in America also should have access to training in these technologies. Nearly half of our current workers cannot operate a basic computer, principally those workers with relatively few other skills. We can and should create a federal grant program for the country's 1,200 community colleges to use their existing computer labs and personnel to offer free computer training several nights a week to anyone who walks in and asks for it. Finally, Congress should look at ways to give workers more and better tools to prosper in this more competitive world, such as portable pensions and the passage of the Employee Free Choice Act.

As global competition increases, we also can and should expand public investments in the factors that foster innovation and help all industries grow and become more efficient. The federal government has long supported the nation's infrastructure, basic research and development, and education and training, all of which are essential to creating new business and spreading technological innovation. In recent years, however, our commitments in these areas have contracted sharply. For example, new commuter rail systems in the nation's larger metropolitan areas can not only bring more workers to more jobs, but also help reduce congestion and dependence on fossil fuels and consequent production of greenhouse gases. In addition, greater support for basic R&D in nanotechnologies for energy and health care, and the human genome for health care, can help to develop new business and over time address some of the long-term cost pressures in health care and energy.

Serious commitment to basic health care and energy policy reforms and meaningful new investments in education, training, infrastructure and basic R&D will be costly, especially at the outset. In the meantime, we can finance these necessary investments in many ways. Wasteful spending in other areas, including tax and spending subsidies for some well-connected companies and industries, can be pared back. Recent tax cuts for very high-income individuals, whose incomes have soared as those of average people have stalled, also can be pared back. Given the economy's basic strengths in this period, such steps will not slow down or hamper its growth in any meaningful way.

There are sound reasons to be wary of deficit spending, especially the prospect of sharply-rising federal expenditures for retirement and Medicare benefits as the baby boom begins to retire just a few years from now. These concerns, however, need not preclude our undertaking these commitments and investments. They will create substantial dividends for both the economy and government revenues over time, by bolstering those specific economic areas where the United States either has real advantages or needs real change. In so doing, they should help generate stronger growth and higher incomes, producing the revenues needed to sustain them. In this sense, these commitments and investments will operate like a sound investment that a good business makes, and often borrows to finance.

In addition, globalization itself can reduce some of the traditional costs associated with budget deficits, especially for the United States. As recently as the 1980s and early 1990s, when global capital markets were smaller and less efficient than today, large deficits in a growing economy claimed domestic savings that otherwise would have gone for business investments. As capital markets have gone truly global, the sheer volume and variety of financial assets flowing through the world's economies have blunted those effects because productive American businesses have direct access to the world's savings.

For some time, global capital has been growing faster than world GDP, faster than global trade, and faster than worldwide saving.17 A fair estimate of the global capital pool today is more than $150 trillion, more than three times world GDP and more than three its size less than 15 years ago.18 Moreover, the rate at which dollars, yen and euros move from one country to another (and often one currency to another) is accelerating even faster than their quantities, tripling in just the last 10 years and reaching more $5 trillion a year in 2006.

The fact that global financial assets today are growing faster than global GDP is meaningful. Since these assets are claims on the future, this rapid growth signals that overall, the world's rich people and rich businesses that hold them most of them are bullish about the future - certainly more so than in 1980, when the world's financial assets were growing much more slowly and totaled just 10 percent more than world GDP.

The unprecedented size of both the global capital pool and capital flows from country to country ultimately reflect the new prosperity of much of the developing world, along with the revolution in information technologies. After the last 15 years of massive transfers of Western investment, technologies and expertise to many countries that had stagnated for decade or centuries - China, India, Malaysia, and Mexico, for instance -their businesses and people are amassing large amounts of new saving and wealth. Modern finance exchanges much of this wealth for corporate bonds, bank deposits, stocks and other kinds of financial assets - economists call this process "securitization" - so that much of this new prosperity ends up in local or national capital pools.

Information technologies play a special role in moving these local and national pools of financial assets into the global capital system, because most of these financial assets now exist in the form of the bytes created, stored and transmitted by those technologies. And no sector has more thoroughly globalized itself than banking and finance. These technologies allow banking and financial institutions to not only link up and manage global operations, but turn physical wealth into securities and financial deposits that unlike paper or gold, can move from account to account and country to country in a nanosecond with no shipping costs. So, while there are relatively limited numbers of businesses in Chile or Indonesia - or even China - that can profitably use all the capital they create and save, firms and wealthy people in Santiago, Jakarta and Shanghai can easily and seamlessly invest their profits and savings in companies in Raleigh, North Carolina and San Jose, California, or lend it to the U.S. government.

There is a cost: Our trade and budget deficits require that we tap into global savings to maintain our business investments, and the result is that a growing share of the U.S. economy and its assets are owned by non-Americans. At last count, 12 percent of all U.S. equities, 25 percent of all U.S. corporate bonds, and 44 percent of U.S. government securities. And the large U.S. current account deficit, comprised mainly of our trade deficit, means that every year, we have to borrow hundreds of billions of dollars more from non-Americans. All that borrowing has depressed the value of the dollar, making it more expensive for American and U.S. businesses to invest abroad. It also raises the possibility of an eventual dollar crisis that would drive up U.S. interest rates.

These are all legitimate concerns, and we should take serious steps to increase our domestic savings. With global capital markets continuing to help finance business investment in the United States, these concerns need not delay the public investments and reforms required to better prepare Americans to live and prosper in an economy shaped by globalization and new technologies.

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