New America on Economic Growth

Chairman, Oberstar, Representative Mica, and Members of the Committee, thank you for inviting me to testify today on the question of "financing infrastructure investments."

Over the past several decades, we have accumulated a sizeable public infrastructure deficit. As a result, a variety of infrastructure bottlenecks-traffic congested roads, clogged ports, and an antiquated air traffic system, to mention just a few-have begun to undercut our economy's efficiency and undermine our quality of life.

One of the reasons for this infrastructure deficit is that our system… more

Over the past several months, few issues in international finance have generated as much discussion and comment as have Sovereign Wealth Funds (“SWF”s). This Committee deserves enormous credit for recognizing the potentially significant foreign policy consequences of the rapid accumulation by foreign governments of enormous, growing pools of capital. These large concentrations of government controlled wealth raise complex issues that transcend traditional boundaries between foreign policy, financial markets, international economics and national security.

It is my belief, however, that too much… more

The Honorable Nova Daly Deputy Assistant Secretary U.S. Department of the Treasury

Dear Mr. Daly:

We are pleased to submit these comments with respect to the recently proposed regulations regarding the implementation of the Foreign Investment and National Security Act of 2007 (“FINSA”) amendments to Section 721 of the Defense Production Act of 1950 (“Exon-Florio”).

As a general matter, we believe that U.S. and global economic health are strengthened by the free flow of investment capital and by the increased liquidity that open… more

America’s basic infrastructure is outdated, worn, and in some cases, failing. Most experts agree that it is inadequate for meeting the demands of the 21st-century global economy. If we are to remain competitive, we must invest in capital assets like roads, ports, bridges, mass transit, water systems, and broadband infrastructure. Many other countries -- both rich and poor -- see investing in infrastructure as imperative for economic survival and success in an increasingly competitive economic environment. But the United States… more

In an economically mobile market economy, individuals and families are able to raise their private incomes, wealth, and ability (sometimes referred to as human capital) over time and across generations. In the United States, many associate economic mobility with the pursuit of the American Dream. Education, work experience, and saving enhance the opportunity for upward economic mobility. To this end, many federal spending and tax expenditure or tax subsidy programs aim to enhance economic mobility. But exactly how much does the… more

The authors of this paper are longtime federal budget and policy experts who have been drawn together by a deep concern about the nation’s long-term fiscal outlook. Our group covers the ideological spectrum. We are affiliated with a diverse set of organizations. We have been meeting informally for over a year, under the auspices of The Brookings Institution and The Heritage Foundation, to define the dimensions and consequences of the looming federal budget problem, examine alternative solutions, and reach… more

The single greatest threat to the fiscal health of the United States is the runaway growth of the nation’s major retirement and health care entitlement programs. Social Security and Medicare are projected to grow from 7.5 percent of GDP today to almost 13 percent of GDP by 2030. Already, the two programs consume over a third of the federal budget. The total present value of costs that will exceed earmarked revenues of Social Security and Medicare over the next 75 years is $41 trillion, or,… more

By way of introduction, I spent most of the last seventeen years working as an investment banker and private equity investor based primarily in London, England. This experience, I believe, gives me a somewhat different perspective on Sovereign Wealth Funds and the role that they play in today’s international capital markets. Currently, I co-direct the Global Strategic Finance Initiative at the New America Foundation. The New America Foundation is a non-profit, post-partisan public policy institute in Washington D.C.

Over the past several months, few issues in international finance have generated… more

While we believe that fiscal stimulus done right would be likely to help the economy, we also believe that a good stimulus package is hard to come by. We have expressed concern that fiscal stimulus might come too late to help the stalling economy and that a package might be loaded up with costly and unrelated items.

Initially, we were gratified as negotiations between the White House and the House of Representatives led to what we found to be a… more

Congress appears poised to move forward with a fiscal stimulus package. In theory, a mixture of monetary and fiscal policy is generally most appropriate to help a slowing economy; in practice however, fiscal policy becomes politicized so easily that it is often ineffective, and is sometimes even counterproductive. Too often in the past, stimulus bills have been poorly timed, poorly targeted, and larded up with unrelated items. If Congress moves forward with a stimulus package, the Committee for Responsible Federal… more

For more than a decade, rising asset prices have driven the economy, benefiting the wealthy but doing relatively little to improve either the economic status of the majority of Americans or the country’s overall competitiveness. Rising stock and housing prices created staggering short-term increases in wealth for some, but did little to bolster the nation’s preeminence in technology, industry, or agriculture.

In order to retool the economy and generate balanced, robust job growth, the government should focus… more

When you arrive at Shanghai’s Pudong International Airport, now about a decade old, you find yourself at the terminus of the world’s fastest train, a magnetic levitation marvel designed in Germany that takes you downtown at speeds briefly touching 450 kilometers an hour. There is little vibration, not much noise. Only a monitor in the car and the landscape rushing past your window lets you know just how fast you are moving.

Similarly, at the Amsterdam, Paris, or Zurich… more

The amount of money now held by governments around the world both in reserves and through sovereign wealth funds (“SWFs”) represents the largest concentration of investment capital the world has ever known. Their sheer size and expected rate of growth raise important issues regarding both the origin of this wealth and how it is to be invested. The origin of these funds rests on two main factors: the global imbalances between debtor nations (like the U.S.) and surplus nations… more

Why aren’t Republican presidential candidates talking more about job training?

Wherever they go on the campaign trail, candidates are asked about off-shoring, layoffs, and wages. Despite the strong U.S. economy and near full employment, middle class anxiety is real.

Hardly a day goes by that some Democratic candidate doesn’t speak about the struggles of the middle class family in the age of globalization.Democrats campaigned last November on responding to working family angst through a minimum wage increase. Republicans often respond… more

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The federal budget needs to prioritize spending that will make our economy more productive in the future. Yet, over the last several decades, the portion of the federal budget going to current consumption has increased, while that devoted to public investment has declined. As a result, the federal government does not adequately fund either… more

In recent decades there has been a massive transfer of economic risk from shared institutional arrangements, such as unemployment insurance and basic benefit coverage provided by employers, onto the fragile balance sheets of families. Yet public programs have largely failed to respond.

"Universal Insurance" is a new response to this growing problem. It would provide short-term, stop-loss protection to families whose income (after taxes and public benefits) suddenly decline by a fifth or more due to job loss or catastrophic… more

Over the past decade and half, two pivotal developments have come together to create the conditions for what could be a new golden era of faster economic growth and rising prosperity. One development involves the technological advancements and other changes associated with the new economy, which have substantially increased U.S. and world productivity growth. The bursting of the tech bubble in 2000 may have put an end to the hype surrounding the new economy. But it did not undo the… more

From its inception as a nation, America's great advantage over its global rivals has stemmed largely from the successful development of its vast interior. The Heartland has been both the incubator of national identity and an outlet for the entrepreneurial energies of both immigrants and those living in dense urban areas.

The term "Heartland" is commonly used to describe the region west of the Mississippi River and east of the Rocky Mountains. This region constitutes the primary focus… more

In his famous work on American democracy, Alexis de Tocqueville observed that "Boldness of enterprise is the foremost cause of [America's] rapid progress, its strength, and its greatness." This observation, made in the mid- 1830s, is one with which few of those who comment on economics and American commerce today would disagree. The "boldness of enterprise" that Tocqueville referred to is entrepreneurship, the process of innovation, which, under conditions of risk and uncertainty, results in the creation of a new… more

This week, the White House submitted its annual Economic Report of the President to Congress. It was a positive forecast driven by continuing strong consumer spending, business investment and export growth. Despite high energy prices and Hurricane Katrina, the White House had a lot of good news to trumpet on the economy from four years of largely uninterrupted economic growth.

For the complete document, please see the attached PDF version.