Last summer, Rob Shapiro and I became alarmed at the economic news coming out of Puerto Rico and decided to do something about it. Over that summer and the following fall, we produced a series of papers and essays about the worsening fiscal and economic crisis there. We also briefed folks around town, including key advisors in the Obama Administration.
Due to the growing interest in these issues, we send along one of our essays from last year, an English language op-ed which ran on the Fusion website (it below and here). You can find a Spanish language companion here which ran on Univision’s site, and the full paper from Rob which we reference here. Rob is a recognized international expert in sovereign debt crises and has advised the IMF on Western Hemisphere economies. As people think about what to do next, we tried to look beyond the short-term, limited fiscal measures at hand, and towards a longer term strategy for the Island that can help reverse its current, economic “death spiral.”
Rob has also written on the economic situation in Greece, which you can find here.
"To Restore Prosperity, Puerto Rico Should Look to Ireland"
Submitted by Simon Rosenberg and Robert Shapiro on 9/17/14
How much longer will the people of Puerto Rico have to live with failed economic policies? It must be clear by now that the Commonwealth reliance on U.S. corporate tax preferences for U.S. companies locating operations there ran its course many years ago. Low tax rates matter to foreign investors, but it’s time for Puerto Rico to expand its horizons well beyond the United States. Rather, the Island should consider the example of Ireland, which a generation ago was the poorest member of the European Union (EU) – and became one of its most prosperous members by 2006.
In the late 1980s, Irish policy planners recognized that the fastest way to modernize their economy and turbo-charge productivity and growth was large-scale foreign direct investment (FDI). They also knew that with scores of middle-income countries vying for FDI, Ireland needed a comparative advantage. So they offered up Ireland as a low-wage, low-cost platform for multinationals from everywhere but Europe to enter the huge EU market. But they also had to make Ireland the most attractive place in the region for foreign investment. So in addition to the tax breaks that countries offered, the Irish government ramped up its public investments in modern infrastructure, they created 10 "enterprise zones" for foreign investors and equipped each zone with a new institution for advanced training and education, and they rolled out an array of special services and subsidies for foreign multinationals. The program even included helping foreign companies find the best locations and workers to meet their needs and providing relief from selected regulations and taxes for individual companies.
From 1987 to 2006, more than 1,000 multinational companies established new facilities in Ireland, including Microsoft, Dell, and Citicorp. The country’s real GDP grew at an average annual rate of 6.9 percent over that period, unemployment fell from 17 percent to 4 percent, the brain-drain of highly-educated young Irish was reversed, and the government’s debt as a share of GDP declined from 112 percent to 33 percent.
Like Ireland and the E.U., Puerto Rico and the mainland United States share a common currency, and virtually everything made in the Commonwealth enters U.S. markets without cumbersome customs and other import regulation. In short, Puerto Rico has a real opportunity to attract large-scale FDI from around the world by offering itself as a low-wage, low-cost platform for multinationals from Latin American, Asia and Europe to sell into the huge American market.
To succeed as Ireland did, Puerto Rico will have to undertake a comparable commitment to undertake difficult spending and tax reform, including targeted increases in public investments in education and infrastructure while still bringing down budget deficits. The Commonwealth government also must repair its tattered image with large foreign investors. To restore their confidence, Puerto Rico must step back from a possible debt default and from proposed changes in its bankruptcy laws to word off technical defaults by its public utilities. In this context, Puerto Rico also can ill-afford widely-publicized controversies that cast doubt on the Government’s commitment to keeps its word, such as current efforts by the Commonwealth Treasurer to negate its legal agreement to provide tax credits for tax over-payments to one of the Island’s major financial institutions, the Doral Financial Corporation.
The alternative is that the future for Puerto Ricans will look much like their present and recent past. After nearly a decade of stagnation and recession, the economy is 13 percent smaller than it was in 2004 – compared to Puerto Rico’s 13 Caribbean neighbors, which have averaged 2 percent annual GDP growth over the same period. That’s unsurprising. Business investment has grown in Puerto Rico at half the rate as elsewhere in the Caribbean. Capital flight has accelerated: foreign financial flows have been negative since 2006; and more recently, FDI flows turned negative as well. Unemployment is double the rate of the U.S. and nearly percent among the young, and the labor participation rate is the lowest in the Western Hemisphere. Moreover, public debt has soared from 66 percent of GNP to 96 percent, and both Moody’s and Standard & Poors rate the Commonwealth’s bonds as junk.
Here’s what ought to be the bottom line: While the per capita income of the Irish people increased from 60 percent of the EU average in 1987 to 136 percent of the average in 2003, per capita income in Puerto Rico today is seven percent less than it was in 2006. The choice – a hard road to long-term prosperity or the easy road to further decline – is Puerto Rico’s.
Having just finished a study looking at the economic performance of the last two Democratic and Republican Presidencies, we decided to take a similar look at how a particular group we have long studied, Hispanics in the United States, fared over the past generation.
As in the broader population, for Hispanics things have gotten far better under recent Democrats and far worse under recent Republicans. Using a very simple economic measure, the unemployment rate among Hispanics, the contrast is very clear:
H.W. Bush: Jan 1989 (8.6%), Jan 1993 (11.3%)
Clinton: Jan 1993 (11.3%), Jan 2001 (5.8%)
Bush: Jan 2001 (5.8%) Jan 2009 (10.1%)
Obama: Jan 2009 (10.1%) June 2015 (6.6%)
In both Bush Presidencies, the net effect of their policies was that millions of Hispanics lost their jobs. In both the Clinton and Obama Presidencies, millions of Hispanics gained jobs.
Admittedly, this is a simple analysis and we will be returning to this again in the coming months. We also include some graphs we think will be helpful in gaining a deeper understanding of the data. You can find a PDF version of this memo below as well.
Source for Data is Bureau of Labor Statistics (BLS).
Unemployment during the Great Recession and Recovery
As America approaches the 239th celebration of its independence, the events that began with the horrific shooting of innocent churchgoers in Charleston, South Carolina on June 17th and culminated in an eloquent eulogy to their grace, and God’s, ten days later by President Obama, seemed to signal a shift in the nation’s direction to a more tolerant, inclusive and confident nation. Those three traits are themselves a reflection of the attitudes and beliefs of the increasingly omnipresent Millennial generation. They form the basis for a new civic ethos that will come to characterize American government in the rest of this decade during which all 95 million members of the generation will enter adulthood. The cohort’s demographic dominance is an inexorable force increasing the chances that the startling changes the country witnessed in the span of less than two weeks are just a foretaste of what America will be like for decades to come.
The first unexpected event that suggested something different was happening occurred when the African-American families of those slain by a white man filled with hate forgave him based on their deep religious beliefs. In a courtroom in Charleston the voice of Vaclav Havel, the charismatic leader of Czechoslovakia’s Velvet Revolution, could be heard through the anguished testimonies of the victim’s families. “Those who have for many years engaged in a violent and bloody vengefulness against their opponents are now afraid of us. They should rest easy. We are not like them,” Havel said at the moment of his triumph over Communism. Similarly, the families foreswore revenge on those who had oppressed their race for generations in order to lay the foundation for a national reconciliation far beyond the confines of the Deep South. The families’ reactions were so unlike the polarizing behavior that has come to characterize American politics that the country stopped and took notice.
The family’s courage and grace was followed by an equally unexpected statement from the Republican Indian-American, female Governor of South Carolina, Nikki Haley. Whereas her more timid colleagues, including the state’s African-American Republican U.S. Senator, Tim Scott , suggested it might be time to talk through the issue of removing the most hated symbol of state’s rights and segregation, the Confederate battle flag, from its honored place on the State Capitol grounds after the victims had been buried, the Governor instead urged the state’s legislature to immediately consider its removal to begin a badly needed process of healing and reconciliation.
But, remarkable as Governor Haley’s words were, nothing could better symbolize the generational import of remarks by two white Southerners of impeccable “Old South” lineage. In response to the Governor’s comments Republican State Senator Paul Thurmond, explained why he would vote to remove the flag. “Our ancestors were literally fighting to keep human beings as slaves, and to continue the unimaginable acts that occur when someone is held against their will. I am not proud of this heritage.” This from the son of Strom Thurmond, the former South Carolina governor and U. S. Senator, a segregationist candidate for president in 1948 and leader in efforts to defy the nation’s civil rights laws in the 1960’s, including raising the confederate flag in state capitols as a symbol of that defiance.
Equally remarkable was the statement of Reverend Robert Wright Lee IV, a descendant of Confederate general Robert E. Lee and a scion of an old aristocratic Virginia family. A 22 year old Millennial, Lee is a pastor in the Cooperative Baptist Fellowship, a group that has broken with the conservative Southern Baptist Convention on issues such as women in the pulpit. When asked what he would say if he had an opportunity to speak with the accused murderer, Reverend Lee replied that he would tell him, “You crucified Jesus yet again on the cross of white supremacy.”
But the debate over the battle flag of the Confederacy and its place in the Millennial Era was just one of a series of transformative events that swept the country in what many observers called the most historic week in Obama’s presidency. On the following Monday, the U.S. Supreme Court, in the case of The Texas Department of Housing and Community Affairs v. Inclusive Communities Project, surprised liberals and conservatives alike by upholding the doctrine of disparate impact as a way to measure violations of the nation’s Fair Housing Act. So sure were liberals that the Court would instead begin to require proof of an overt intention to discriminate that they had quietly pushed for settling two earlier cases, expecting the Court to knock out the legal underpinnings for much of the jurisprudence surrounding the country’s anti-discrimination laws. Instead the Court made it clear that statistics and other evidence can be used to show decisions and practices have discriminatory effects without proving they are the result of direct discriminatory intentions.
As we documented in our book, Millennial Momentum, the Supreme Court, as the only branch of the federal government whose members enjoy lifetime employment, is usually behind the times initially when it comes to shifts in public opinion as the country moves from one era to another. Most famously, the “nine old men”, in Franklin Delano Roosevelt’s words, struck down much of the initial New Deal legislation as being unconstitutional in the reach and scope that those laws gave the federal government to interfere in the operation of the nation’s economy. But in FDR’s second term, with clear evidence from the President’s landslide victory in 1936 of where popular opinion stood on these issues, the Court had a change of heart and found no reason to doubt the constitutionality of Social Security or the Wagner Act’s rules for collective bargaining, or for that matter any of the myriad New Deal laws that came to its attention in later years. So too, in the Fair Housing decision, a 5-4 majority of the court decided that the country was best served after all by a vigorous prosecution of those actions leading to the social inequalities that so trouble members of the Millennial Generation.
That decision was merely a prelude to the 5-4 majority decision making same sex marriage the law of the land that was announced on Friday of the same remarkable week. This time it was clear to everyone that the Court was “following the election returns” as Mr. Dooley, Finley Peter Dunne’s wise and witty Irish bartender so famously pointed out more than a century ago. Thanks to the 73 percent of Millennials who support for gay marriage, the country’s opinion on this controversial topic had shifted at lightning speed from hostility to endorsement during the decade when a majority of the generation became eligible to vote. Even 59% of Millennial Republicans favor the legalization of gay marriage. Using the positive values of love and marriage rather than scolding opponents for their bigotry, allowed the “win-win” Millennial way of making decisions to transform public opinion. In the words of conservative columnist George Will, “whether someone was gay or not became as irrelevant as whether they were right or left handed.” All that remained was for the Supreme Court to find a way to embed that new consensus in constitutional principles, which Justice Kennedy did over the loud and even rude objections of his Boomer conservative colleagues.
A day before this decision was announced, the Court also put its final imprimatur on the validity of the Affordable Care Act, a law that is not only President Obama’s signature legislative achievement, but an excellent example of the Millennial civic ethos that will dominate public policy in the future. As complex as the Act’s provisions may be, when taken as a whole, as the Justices did in this particular decision, it does set up a new structure for how government can use its power to shape markets. ObamaCare’s strategy was completely different than the New Deal approach to federal regulation. It did not, despite the hysterical posturing of its opponents, impose the heavy hand of bureaucracy on health care markets, as it might have done by creating a “public option” for the direct provision of health care as many liberals wanted it to do. In this new civic ethos, the roles of the federal government and state governments are separately defined and the responsibilities for behaving properly are placed squarely on the individual. The Act sets the rules for the nation’s health care markets, but doesn’t dictate who is allowed to play in the game. It uses the power of the federal government to make the game fairer by offering subsidies to those least able to pay for health insurance. But it also uses the federal government’s taxing authority to impose penalties on anyone who seeks to avoid their responsibility to buy health insurance and not play at all. States were seen as the best place for individuals to learn more about their options and to provide solutions tailored to local needs. Some states stepped up to do just that. In others, Republican governors raised ideological objections. This ironically, forced their citizens to interact directly with the federal government despite their loud calls for defending states’ rights. All these new roles and responsibilities proved to be confusing at times to the drafters of the detailed legislations, but the Court was correct in deciding by a decisive 6-3 majority that what the Congress intended, a more inclusive and equitable health insurance market, should not be put asunder by judicial intervention.
But all of the signs of an emerging consensus didn’t just come from a meeting of the judicial and executive minds. In the middle of the eventful week that was, Republicans in Congress decided to hand their arch political enemy, President Obama, a victory on trade authority that only one week before had been sabotaged by leaders of the President’s own party. The trade negotiating authority he was granted by Congress is the linchpin in Obama’s strategy to confront America’s largest economic and military rival, China, through economic and diplomatic moves, rather than war.
As evidenced by the generation’s attitudes toward free trade, this approach is classically Millennial. A June, 2015 Pew survey found that 69 percent of Millennials say that free trade agreements are “a good thing for the United States,” while 56% believe that such treaties have helped them personally. Unlike those who represent economic structures and constituencies of America’s past, Millennials have always lived in a time of global competitiveness and are optimistic that they can win any such contest. They lead America in supporting the continued expansion of global trade using the mechanisms of multi-lateral treaties and due process, while providing aid to those who might be hurt by such competition. Whether President Obama, Senator Mitch McConnell, and Speaker John Boehner were listening to the voices of their Millennial constituencies when they cut their deal or not, the political fallout from having done so will be much less because of the confidence and optimism Millennials bring to their economic endeavors.
All of these momentous events were only the prelude to the remarkable conclusion to the country’s giant step into the Millennial Era. When President Obama addressed those assembled to mourn the shooting, ten days earlier, of Reverend Clementa Pinckney in Charleston’s historic Mother Emanuel AME Church before a racially-mixed congregation that reflected the diversity and tolerance of the Millennial generation, the President turned to his Christian faith and its notion of grace to explain the actions of the victim’s families in forgiving the person who had harmed them, culminating in an act that will be memorialized in every historical account of his presidency. He began singing “Amazing Grace,” all alone and in acapella style, until the congregation and the organist joined in, inviting everyone in the country to do so as well.
He also spoke of the way forward to a better America. He dismissed the typical Boomer generation call for additional conversations about race and instead pushed for immediate action to address some of the wrongs society has visited upon its most vulnerable and discriminated against minorities. “We talk a lot about race,” he said “There’s no shortcut. We don’t need more talk.” Mindful, as he said in a podcast interview earlier in the week, that real racial progress has been made in America on racial issues, he outlined additional actions that could be taken to improve race relations in both the political and economic spheres. He did not recommend new federal legislation. Instead his suggestions reflected the Millennial generation’s belief in thinking globally, but acting locally and individually to solve the big problems confronting the nation. He suggested that employers call back “Jamal and not just Johnny” for job interviews, that local government work to improve community/police relations, and that states stop trying to restrict voting rights.
History is best seen in a rear view mirror. The passage of time helps clarify which events and decisions turn out to have lasting impact and which do not. Many observers were sure that the 9/11 terrorist attacks would set America on a new course of unity and strength or that the Great Recession would lead to a more populist approach to economic policy. But as important as those events have been in shaping the beliefs of the Millennial Generation, neither led to any new national consensus on how to address the nation’s challenges. Instead, even after 9/11 and the Great Recession, the country’s politics remained on a continuing course of retribution and resistance, reflecting the deep ideological divisions of America’s previously largest generation, Baby Boomers. Consequently, it can’t be said with certainty that the sudden alignment of the nation’s Supreme Court with the priorities of its chief executive and the willingness of previously hostile political forces to join in an atmosphere of comity and reconciliation will turn out to be as propitious as it appears at the moment. But there are plenty of signs to suggest that America became a more tolerant, inclusive, confident, and pragmatic country in this amazingly short period of time.
We can only hope, as the President suggested in his eulogy to Reverend Pinckney , that not only will God continue to shed his grace on America, but that the final lines of the revered patriotic hymn, , “America the Beautiful,” will also become true, thanks in large part to the continued acceptance of the values of the Millennial Generation. If America follows the generation’s lead, it will be more completely crowned “with brotherhood from sea to shining sea,” then it has ever been before.
Happy Fourth of July to all Americans and especially the members of America’s next great generation, Millennials.
It is always a bit dangerous to extrapolate too much from a single poll, but findings in the new CNN/ORC poll if true and lasting are important for understanding the emerging 2016 landscape. The poll published earlier this week finds the approval of the President’s handling of the economy is now 52%, higher than his overall approval rating which stands at 50%. As CNN reports, this is the President’s highest rating on the economy in six years and may be the first time his approval rating on economic matters has been higher than his own personal approval rating. New consumer confidence data out yesterday shows a similar potentially structural jump in the public’s understanding of where the US economy is today (and it should be noted that these gains have come at the same time TPA was debated and passed once again challenging the conventional wisdom that advancing these trade agreements is bad politics).
Why is this so important? It speaks to where the GOP can go in 2016. Many commentators this past weekend dwelled on the anachronistic social agenda of the modern GOP and how it is likely to be a major drag for their party in 2016. This leaves the GOP candidate nominee more opportunity perhaps on the economy and security matters some suggested. But if Obama and Democrats are beginning to get credit now for turning the economy around, why would one elect a Republican in 2016? Particularly since this will have been the second consecutive Democratic Administration who had to turn things around from a GOP President whose policies brought us recessions and higher deficits? And the truth is the economy is far better now due to President Obama – tens of millions more are employed, tens of millions have gained health insurance, the annual deficit is a third of what it was in Bush’s last budget, the stock market is at historical highs, and there is a growing body of evidence showing that wages have begun to go up for the first time in fifteen years. Under this President and his policies the country is far better off, and the public is beginning to notice. And the projections for the next eighteen months suggest things are far more likely to get better than worse for the US economy.
Given all this it is just hard to see a way for the GOP to win the economic debate in 2016, particularly given that on fiscal matters – their supposed strong suit – the last two GOP Presidents have brought higher deficits while the last two Democratic Presidents have brought lower ones. Winning the economic argument in 2016 may be just as challenging for the GOP as winning on social issues. Democrats will be able to make a clear and convincing case that over the past generation it is just simply true that under Democratic Presidents the lives of everyday people have gotten better and under Republican Presidents they have gotten worse.
Thus, it is likely that the GOP is going to have count on winning the argument about who is best about keeping us safe as the cornerstone of their 2016 approach, an approach that worked well for them in 2014. Certainly there could be an opening for the GOP here. But my own view is that like the economy there is a lag in understanding of how much the President has achieved in foreign policy and security matters. He has pursued broad, strategic engagement in Europe and Asia, highlighted by his ambitious trade agreements in both regions. With his bold Cuba initiative, and other policies, relations with Latin America are strong and solid, and improving as was evidenced by the very warm event with President Rousseff of Brazil yesterday. The President has taken unprecedented steps to tackle global climate change, and his “all of the above” energy strategy has helped make the US far more energy and geopolitically independent. The US-Mexico border is far more secure than it was in the Bush era, and net undocumented migration into the US has gone from hundreds of thousands a year to zero. This President is helping rediscover the very best in the American foreign policy tradition, using all the tools in his tool box – economic sanctions, trade negotiations, traditional diplomacy and military might – to advance American interests abroad and make the world safer and more secure. Recent polling suggests the public likes this approach, and appreciates this President’s efforts to shape the course of history through more than just risky military conflict.
But what about the Middle East and terror? While President Obama may join the long line of American Presidents who struggled to improve things in the most challenging region of the world, the judgment of his strategic approach here still needs more time to settle on the ground and with the public. Much could change for the better, or the worse, in the next eighteen months. We don’t know how the Iran deal will turn out but at his point in his Presidency it would be ridiculous to dismiss these efforts as naive or ill thought through. But however the public will judge him next year it is hard to see how the simplistic belligerence of the modern GOP will either make the current global situation better, or their party popular with the American public skeptical of yet another American war in the Middle East. The last GOP President brought a series of foreign policy disasters for the US perhaps unparalleled in our history. And that legacy is likely to be as a big a drag in 2016 as any other the GOP faces no matter the record of President Obama next year. So even this issue set is going to be hard for the GOP to prevail on next year.
Finally, Hillary Clinton also seems prepared to open a new front which could end up being very advantageous to the Democrats in 2016 – political and governmental reform. As I have written elsewhere, this is an area of incredible opportunity for the center-left. What has become true in recent years is that there is one party which wants everyone to vote and to ease participation in our democracy, and one party which doesn’t. If fully developed this issue could become a powerful and meaningful new bludgeon for the Democrats in 2016, one making an already promising political landscape even more so.
So yes, it is early. And yes this is one poll. And yes much will change. But as we look ahead to 2016 a winning issue/agenda/argument path for the GOP is hard to see.
In a long form magazine piece from a few years ago, I offered my own explanation for why the GOP is struggling so much with modernity, and been so unsuccessful in looking forward rather than back.
Update: Gallup reports a significant swing in Party ID towards the Democrats this quarter, providing further evidence of structural changes emerging in the 2016 landscape.
In light of the major economic events occuring over the weekend in Greece and Puerto Rico, we compiled our recent works on these topics for use in the coming days.
Greece – Rob Shapiro has assessed the financial circumstances in Greece in a recent report, "How Greece Could Short-Circuit the U.S. Expansion." He says in part: "This crisis has unfolded in fits and starts for a long time, and the EU and the European Central Bank (ECB) have spent hundreds of billions of Euros trying to support those bond markets and strengthen the banking system. No one knows if it will be enough to stave off the worst-case scenario. But if a genuine crisis unfolds over the next month or so, everyone does know that European voters will never accept another bank bailout. And if Europe’s economy falls into a tailspin, the ECB will have little room to support and stabilize it by cutting interest rates."
Puetro Rico – Last fall, NDN was among the first organizations to raise the alarm bell about Puerto Rico, publishing a series of reports/essays and participating in meetings inside the Administration and on the Hill. We released a paper tackling Puerto Ricos' debt crisis: "To Reclaim Prosperity, Puetro Rico Should Adapt Ireland's Model for Modernization." Afterwards, Simon and Rob published additional analysis, writing an op-ed in Fusion/Univision (in both English and Spanish) and a follow-up op-ed in Roll Call.
"NDN is pleased that the U.S. Senate voted to advance trade promotion authority today. We expect that TPA will pass the full Senate later this week and head to the President's desk for signing soon after.
We hope that this new momentum will allow USTR Froman to bring the TPP round to a rapid close in the coming weeks.
Once again, we applaud the more than 40 Democrats in the House and Senate who voted to pass TPA in the last few weeks."
- Simon Rosenberg, President of NDN
For more on NDN's work on the President's trade agenda, visit this backgrounder.
Over the past few weeks, NDN has been featured in some of the nation’s biggest newspapers on a range of issues, including the debate over TPA and the President’s trade agenda, income inequality, the Latino Electorate, the 2016 Presidential Campaign, and more. Be sure to check back periodically as will be updating this with our latest press:
Thanks to all of you who put the hard work in to get us to this point. If you can, and if you haven't already, please take a few minutes today to thank all of these courageous Senators and Members of the House who took a tough vote (or two!) and voted for TPA:
The Senate - these 13 couragegous Senators voted for final passage: Michael Bennet, Tom Carper, Chris Coons, Maria Cantwell, Dianne Feinstein, Heidi Heitkamp, Tim Kaine, Claire McCaskill, Patty Murray, Bill Nelson, Jeanne Shaheen, Mark Warner, and Ron Wyden.
The House - These 28 courageos Members of the House voted for final passage of TPA: Brad Ashford (NE-2), Ami Bera (CA-7), Don Beyer (VA-8), Earl Blumenauer (OR-3), Suzanne Bonamici (OR-1), Gerry Connolly (VA-11), Jim Costa (CA-16), Jim Cooper (TN-5), Henry Cuellar (TX-28), Susan Davis (CA-53), John Delaney (MD-6), Suzan DelBene (WA-1), Sam Farr (CA-20), Ruben Hinojosa (TX-15), Jim Himes (CT-4), Eddie Bernice Johnson (TX-30), Derek Kilmer (WA-6), Rick Larsen (WA-2), Ron Kind (WI-3), Gregory Meeks (NY-5), Beto O'Rourke (TX-16), Scott Peters (CA-52), Jared Polis (CO-2), Mike Quigley (IL-5), Kathleen Rice (NY-1), Kurt Schrader (OR-5), Debbie-Wasserman Schultz (FL-23), Terri Sewell (AL-7).
There are many ways to thank these members, but the easiest is just to call the congressional switchboard at 202 224-3121, ask to speak to their office and then let their receptionist know that you are grateful for their courage and support of TPA .
With TPA now the law of the land, we are already looking ahead to the campaign to pass TPP when it is finalized in the weeks ahead. We will back in touch with you as this effort gears up this fall.
For more on NDN’s work in support of the President’s trade agenda, including my op-ed, “An Enduring Legacy: The Democratic Party and Free and Open Trade” visit NDN's TPA "Backgrounder" here.
"NDN applauds the House for mustering a majority for trade promotion authority for the second time in the past week. Both chambers have now voted affirmitively in support of advancing TPA, and we are optimistic that Congress can work through the issues that remain so the President can sign it soon.
And we applaud the 28 House Democrats who have now voted twice to pass TPA, and the 14 Senate Democrats who will be called on again to support TPA in the coming days."
- Simon Rosenberg, President of NDN
For more on NDN's work on the President's trade agenda, visit this backgrounder. You can also read our previous statement following last Friday's TPA vote in the House, "On TPA Passing, But Not Passing."
In chaos theory, the flutter of a butterfly’s wing can ultimately cause a typhoon halfway around the world. This week, Greece, a nation with a GDP smaller than the Philippines, became that butterfly – and its ongoing economic struggles could cause storms that would upend the financial stability of Europe and wreak serious collateral damage on our own economy.
Greece has flirted with sovereign debt default for more than three years. The latest talks for another bailout from the European Union and the IMF broke down this week, with Greek Prime Minister Alexis Tsipras calling the EU proposal “humiliating and the IMF’s conduct “criminal.” Normally, the debt troubles of a country with an economy barely one percent the size of our own wouldn’t matter much to us. But as a member of the EU and the Eurozone monetary union, Greece’s problems can reverberate deeply throughout Europe. Global investors already are nervous that the EU and IMF may be unable to head off Greece’s looming insolvency. If the worst happens, Greece’s default could trigger runs on government bond markets in other Eurozone countries seen at risk, including Italy and Spain. Since Europe’s large financial institutions hold more than $1 trillion worth of those bonds, a Greek default could spark a financial meltdown rivalling even the 2008-2009 crisis,
This crisis has unfolded in fits and starts for a long time, and the EU and the European Central Bank (ECB) have spent hundreds of billions of Euros trying to support those bond markets and strengthen the banking system. No one knows if it will be enough to stave off the worst-case scenario. But if a genuine crisis unfolds over the next month or so, everyone does know that European voters will never accept another bank bailout. And if Europe’s economy falls into a tailspin, the ECB will have little room to support and stabilize it by cutting interest rates.
Greece’s default also would trigger its exit from the EU and the Eurozone. No country has ever done so before, so no one knows precisely what would happen next. Inevitably, the consequences would be destructive. To begin, if Greece has to abandon the Euro and revive the drachma, its economy would come to a halt. The government could not pay its employees, vendors or issue pension checks; and untold thousands of Euro-based contracts across Greece and between Greek and foreign concerns would have to be renegotiated. So, on top of an unfolding financial crisis, the balance sheets of those foreign firms would suffer further, and a rapidly-deepening recession would spread across much of Europe.
These prospects explain why President Obama made the Greek crisis a top priority in his talks at the recent G-7 summit. The EU is America’s largest trading partner; and perilous times there would quickly affect U.S. jobs and investment – and those costs would increase as the fast-falling value of the Euro would drive up the foreign prices of U.S. exports. Even more serious, our financial institutions and multinational companies have thousands of deals involving European banks. In a crisis, that becomes bad news for U.S. stocks: If cascading events threaten the solvency of those banks, many of those deals will become problematic, depressing the value of our own banks and companies. The results here at home could be a credit crunch, falling employment, and a new recession – and this time, the Federal Reserve could do little to help.
The United States needs a prosperous Europe for not only the obvious economic reasons, but also as our geopolitical partner from the Middle East to the Korean peninsula and the South China Sea. A weakened Europe, consumed by recession and facing the possible unraveling of a half-century of economic union and political collaboration, won’t be there for us the next time a U.S. president needs support to advance American and western interests and influence.
What are the odds? A scenario in which everyone loses usually inspires steps to head off the terrible reckoning. Yet, events in coming weeks may demonstrate how domestic politics in Greece and across much of Europe put the two sides at such cross purposes that everyone will needlessly suffer. At this point, calming this butterfly’s wings will require uncommon statesmanship and a real willingness by leaders in Greece, the EU and Washington to take measures that will cost them popular support. So far, we’ve managed to side-step a serious crisis, and we could see another deal that papers over the problems for a while. But if Greece and the EU do run out of options this time, your retirement accounts could lose a third of their value over the next year.
This post was originally published on Dr. Shapiro's blog