AEI » Latest Content http://www.aei.org American Enterprise Institute: Freedom, Opportunity, Enterprise Fri, 30 Jan 2015 16:10:05 +0000 en-US hourly 1 Why Obama and the Saudis Like Low Gas Priceshttp://www.aei.org/publication/obama-saudis-like-low-gas-prices/ http://www.aei.org/publication/obama-saudis-like-low-gas-prices/#comments Fri, 30 Jan 2015 16:08:27 +0000 http://www.aei.org/?post_type=publication&p=829814

Have you heard about the secret conspiracy between the Saudis and the White House? I haven’t either, probably because there isn’t one. But events are playing out exactly as one would expect if such a conspiracy existed.

With no help from Barack Obama, the U.S. has launched an energy revolution, becoming the world’s leading oil and natural-gas producer. This has dismayed environmentalists and donors in and out of the Obama administration. After all, Obama bet big — really big — on green energy. The oil and gas boom is not the energy revolution Obama was looking for.

Saudi Arabia and other petro-monarchies aren’t happy about it either (which is one reason the United Arab Emirates and other OPEC states bankroll anti-fracking propaganda in the West). Until recently, Saudi Arabia was the world’s biggest oil producer, and it is still arguably the most important one in global markets because its oil is so easy to get out of the ground. The cheaper it is to extract, the easier it is to maintain profits when prices go down. That means the Saudis have an outsized ability to affect the global price of oil.

And that’s exactly what they’re doing. “Saudi Arabia,” writes Nathan Vardi of Forbes, “is making a massive $750 billion bet in 2015 that the oil kingdom can endure lower oil prices longer than other major oil producing countries both within and outside OPEC, even including American shale.”

If the Saudis can keep oil at or below $50 a barrel, many American fracking and offshore operations will either have to close up shop — which is already happening — or never launch in the first place, because the profit just isn’t there.

This is typical behavior for the Saudis and for OPEC, which, after all, is an international price-fixing cartel that would be illegal under our antitrust laws if it were an American outfit.

The White House, meanwhile, is only too happy to take credit for low gas prices and our decreased dependence on foreign oil. It’s also happy to take advantage of them. Not only does the president boast — as he did in his State of the Union address — about low gas prices, despite having done next to nothing to make them possible (nearly all new oil and gas production has been on state or private lands), he’s taking a bow for the economic benefits as if he deserves the credit.

One small example: Obama is constantly touting a newly low unemployment rate as if it were the result of his policies. The odd thing is that, as American Enterprise Institute economist Mark Perry notes, literally all of the job gains of the past seven years were generated by one state: oil-rich Texas.

From December 2007 to December 2014, according to Perry, Texas has added 1.25 million payroll jobs and 190,000 non-payroll jobs. Meanwhile, the other 49 states and D.C. combined have 275,000 fewer jobs than they did at the start of the recession. One wonders: If Obama is responsible for all these job gains, why did he put them all in George W. Bush’s home state?

Anyway, back to the non-conspiracy. By artificially keeping oil prices low, the Saudis get to deal a powerful blow to the energy revolution in the U.S. (They also get to deliver a severe economic blow to their enemies the Iranians, which is nice.) In exchange, Obama gets an unearned political windfall and can claim vindication for his ineffectual economic policies.

Obama is paying back the Saudis by permanently taking the Arctic National Wildlife Reserve’s billions of barrels of oil off the table for all time. By doing so, he also puts the entire Trans-Alaskan Pipeline System (TAPS) on a starvation diet. North Slope oil production is half of what it once was, and if it falls below 350,000 barrels per day, the TAPS itself will start to become economically and technically unfeasible. In other words, Saudi Arabia’s short-term economic hit is an investment in future dependence on Saudi oil.

Of course, there need not be a conspiracy, just a convergence of economic and political interests. But the fact remains that Obama could never have gotten away with restricting energy development in ANWR before an election or when gas prices were high. This is Obama’s window, and it appears the Saudis are holding it open for him for as long as he needs.

— Jonah Goldberg is a senior editor of National Review and a fellow at the American Enterprise Institute. You can write to him by e-mail at goldbergcolumn@gmail.com or via Twitter @JonahNRO. © 2015 Tribune Content Agency, LLC

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Export-Import Bank fuels fight between pro-business and free-enterprise GOPhttp://www.aei.org/publication/export-import-bank-fuels-fight-pro-business-free-enterprise-gop/ http://www.aei.org/publication/export-import-bank-fuels-fight-pro-business-free-enterprise-gop/#comments Fri, 30 Jan 2015 15:50:09 +0000 http://www.aei.org/?post_type=publication&p=829807 Stephen Fincher’s timing was perfect.

The Republican Congressman on Wednesday introduced his first piece of legislation for the 114th Congress: a bill to renew the charter of the Export-Import Bank. On the same day, Boeing — easily the biggest beneficiary the agency’s taxpayer-backed financing — announced $1.47 billion in fourth-quarter profits, 19 percent higher than last year, along with a record backlog of airplane orders that stretches eight years.

Fincher got 57 co-sponsors for his Ex-Im bill, all of them Republicans.

In this way, Fincher neatly laid out the mindset of half of the Republican Party: The GOP is the pro-business party.

You see, all that talk of lower taxes, less regulation, and less federal spending could fit sensibly in a framework of free enterprise and limited government. But support for Ex-Im — a federal agency that uses taxpayer dollars to subsidize American exporters and their banks — doesn’t fit in such a free-enterprise frame. The mindset that can simultaneously advocate deregulation and export subsidies is the one that simply says, “listen to the business lobby.”

The mindset of the other half of the GOP is different: Republicans are the party of free-enterprise, not because it serves the big and wealthy, but because it puts competitive pressure on the big guys, creates opportunity for little guys, and empowers consumers.

Financial Services Committee Jeb Hensarling, R-Texas, articulates that view often. His committee has control over Ex-Im, whose charter expires this summer. Hensarling sees Ex-Im’s activity as cronyism and corporate welfare, and he would just as soon let it die.

Hensarling’s Senate counterpart, Banking Committee Chairman Richard Shelby, R-Ala. also has a free-market populist streak to him. Shelby opposed the 2008 Wall Street bailout, and he’s the only current GOP Senator who voted in 2010 to break up the big banks. But Shelby voted to renew Ex-Im’s charter in 2012. On the other hand, he also supported a failed measure by Sen. Pat Toomey to try to curb the agency and wind it down.

On Thursday, Shelby had mixed remarks on Ex-Im: “I have some real problems with the way the Export-Import Bank has been administered,” CQ Roll Call quoted Shelby. “It’s corporate welfare, and we’ll address that at the proper time.”

Senate Majority Leader Mitch McConnell voted against Ex-Im in 2012, and in recent months has reaffirmed his opposition to renewing the agency.

And so resistance to Ex-Im has momentum, even as Fincher and the industry lobby behind him ramp up their push for renewal. But the numbers, frankly, are grim for conservatives.

While the GOP is divided in half on the matter, the Democratic Party (you know, the one that inveighs against big business and corporate lobbyists) is nearly uniform in its support for Ex-Im. After all, the more government funds big business, the more government controls industry.

Add the two parties together, and you’ve got two-thirds to three-fourths of both chambers likely to support the agency. So, what can the free-enterprise half of the party hope for?

First: Republican leaders could use the party’s majority status to simply kill the agency. The free-market populists don’t need a floor vote to kill Ex-Im, they just need to prevent a vote to save it. Conservatives are hoping that Republicans can vote as a caucus whether or not to extend Ex-Im. If a majority of the GOP majority says no, then House Speaker could simply refuse to bring the bill to the floor.

This would involve GOP leadership going to war with their close allies on K Street and Wall Street — wishful thinking, perhaps.

The second option is to reform Ex-Im. Fincher’s bill demands all sorts of studies and reports from the agency, but these are empty gestures. The Heritage Foundation’s Diane Katz, after reading Fincher’s bill, laughs at the notion that there are any true reforms in there.

If Shelby wants a real reform, he’d have to start from scratch. He could begin by shrinking the agency dramatically — bringing the maximum amount of authorizations down from about $25 billion in 2014 to half that in 2015, with further cuts the following year.

Next, a reform bill would prohibit loans and guarantees to state-owned businesses and banks. The Export-Import Bank of China, for example, has received Ex-Im guarantees, as has Saudi Arabia’s state-owned airline.

Finally, a real reform bill might limit the larger loan guarantees to those cases where a U.S. manufacturer faces competition from a foreign manufacturer receiving export subsidies, with real punishments if Ex-Im breaks this rule.

Majority Leader McConnell could make sure these rules are enforced, because he gets to name two new appointees to Ex-Im’s board. If he picks conservatives who are sticklers, he can make sure Ex-Im is truly chastened and its sails are truly trimmed.

Alternatively, the GOP could opt to be the party of business, as usual.

Timothy P. Carney, The Washington Examiner’s senior political columnist, can be contacted at tcarney@washingtonexaminer.com. His column appears Sunday and Wednesday on washingtonexaminer.com.

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5 quick thoughts on today’s US GDP reporthttp://www.aei.org/publication/5-quick-thoughts-todays-us-gdp-report/ http://www.aei.org/publication/5-quick-thoughts-todays-us-gdp-report/#comments Fri, 30 Jan 2015 15:46:33 +0000 http://www.aei.org/?post_type=publication&p=829802 From Bloomberg:

The economy in the U.S. expanded at a slower pace than forecast in the fourth quarter as cooling business investment, a slump in government outlays and a widening trade gap took some of the luster off the biggest gain in consumer spending in almost nine years. Gross domestic product grew at a 2.6 percent annualized rate after a 5 percent gain in the third quarter that was the fastest since 2003, Commerce Department figures showed Thursday in Washington. The median forecast of 85 economists surveyed by Bloomberg called for a 3 percent advance. Consumer spending, which accounts for almost 70 percent of the economy, climbed 4.3 percent, more than projected.

1.)  Good news if you think the economy’s big problem is a lack of consumer demand. Help from gas prices now and going forward, too. Barclays: “The US consumer is receiving a windfall from lower energy prices while a stronger dollar and weak global growth is weighing on net exports.”

2.) If you are worried about a chronic lack of business investment, not so good. “The strong pace of consumer spending in the fourth quarter, however, was overshadowed by a drop in capital expenditure. Business spending on equipment fell at a 1.9 percent rate. It was the largest contraction since the second quarter of 2009,” Reuters explains. Maybe just a dip after two stronger quarters. We’ll see. But don’t blame falling oil prices shutting down the shale revolution. Capital Economics: “This weakness does not, however, reflect a pull back by oil producers. Mining structures investment increased by 9% annualised and mining equipment investment was broadly unchanged.”

3.)  The 2.4% annualized rise in the fourth-quarter employment cost index suggests plenty of slack in the labor market. Where is the wage growth? Well, at least it didn’t show wages declining like the last jobs report did.

4.)  How badly is GDP missing the digital economy? A great point here from a new analysis by Michael Mandel: “The rise of the data-driven economy means government economic statistics may significantly understate US GDP growth and productivity growth. Official numbers are afflicted by huge and growing blind spots that increasingly distort the published figures.  To summarize, we are building a mammoth data-driven economy that, perversely, is only partly visible in the economic data.”

5.) If the previous point is true, they maybe it is less likely the economy is suffering from secular stagnation. After all, many thought this would be a year of accelerating growth. And in some ways it was. The past three quarters combined were the strongest of the recovery. Yet year over year, growth was up 0.2% over last year. (It was actually down on 4q-to-4q basis.) Many on Wall Street are expecting a 3-3.5% GDP year this year. Another 2% year, I think, makes the stagnation case stronger.

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AAAS scientists: Consensus on GMO safety firmer than for human-induced climate changehttp://www.aei.org/publication/aaas-scientists-consensus-gmo-safety-firmer-human-induced-climate-change/ http://www.aei.org/publication/aaas-scientists-consensus-gmo-safety-firmer-human-induced-climate-change/#comments Fri, 30 Jan 2015 15:34:18 +0000 http://www.aei.org/?post_type=publication&p=829801 In sharp contrast to public views about GMOs, 89% of scientists believe genetically modified foods are safe.

That’s the most eye-opening finding in a Pew Research Center study on science literacy, undertaken in cooperation with the American Association for the Advancement of Science (AAAS), and released on January 29.

The overwhelming scientific consensus exceeds the percentage of scientists, 88%, who think humans are mostly responsible for climate change. However, the public appears far more suspicious of scientific claims about GMO safety than they do about the consensus on global warming.

Some 57% of Americans say GM foods are unsafe and a startling 67% do not trust scientists, believing they don’t understand the science behind GMOs. AAAS researchers blame poor reporting by mainstream scientists for the trust and literacy gaps.

The survey also contrasts sharply with a statement published earlier this week in a pay-for-play European journal by a group of anti-GMO scientists and activists, including Michael Hansen of the Center for Food Safety, and philosopher Vandana Shiva, claiming, “no scientific consensus on GMO safety.”

A huge literacy gap between scientists and the public on biotechnology is one of the many disturbing nuggets that emerged from the Pew Research Center survey, which was conducted in cooperation with the AAAS, the world’s largest independent general scientific society. The full study, released on January 29, is available here.

The first of several reports to be released in coming months, this study compares the views of scientists and the general public on the role of science in the United States and globally.

The eye opening take-away: The American population in general borders on scientific illiteracy. The gap between what scientists believe, grounded on empirical evidence, often sharply differs from what the general public thinks is true. The differences are sharpest over biomedical research, including GMOs.

88% of AAAS scientists think eating GM food is safe, while 37% of the public believes that it’s not–a 51-percentage point gap
68% of scientists say it is safe to eat food grown with pesticides, compared with 28% of citizens–a 40% gap.
A 42-percentage point gap over the issue of using animals in research–89% of scientists favor it, while only 47% of the public backs the idea.

2015-01-29-widedifferencs.png

The scientist/public perception gap is less pronounced over climate, energy and space issues.

  • 37-percentage point gap over whether humans are the primary cause of climate change–87% of AAAS scientists say it is, while 50% of the public does.
  • 33-percentage point gap on the question about whether humans have evolved over time–98% of scientists say we have, compared with 65% of the public.
  • By a 20-percentage point margin, citizens are more likely than scientists to favor offshore oil drilling.
  • By a 12-point margin, the public is more likely to say that astronauts are essential for the future of the U.S. space program.

2015-01-29-climateenergy.png
The survey represents a sample of 2,002 adult citizens and 3,748 scientists who are all members of the AAAS.

“As scientists size up the culture and their place in it,” Pew said in a statement. “Scientists are notably less upbeat than they were five years ago and express serious concerns about public knowledge of science and the way scientific findings are covered by journalists.”

The scientists believe that media hype is one possible reason for large gaps in opinion between their views and that of the public, particularly in the debate over GMOs. Seventy-nine percent of scientists said that the media doesn’t distinguish between “well-founded” and “not well-founded” scientific research. Additionally, 52 percent agreed that the media oversimplifies the science.

Three years ago, the AAAS released an unequivocal statement on the safety of GM foods and why a consensus of its members oppose mandatory labelling:

There are several current efforts to require labeling of foods containing products derived from genetically modified crop plants, commonly known as GM crops or GMOs. These efforts are not driven by evidence that GM foods are actually dangerous. Indeed, the science is quite clear: crop improvement by the modern molecular techniques of biotechnology is safe. Rather, these initiatives are driven by a variety of factors, ranging from the persistent perception that such foods are somehow “unnatural” and potentially dangerous to the desire to gain competitive advantage by legislating attachment of a label meant to alarm. Another misconception used as a rationale for labeling is that GM crops are untested.
The AAAS also has addressed claims by anti-GMO advocacy groups, frequently echoed in the media and on activist websites, that GM foods are less tested or nutritionally deficient when compared to organic or other conventional foods.

… contrary to popular misconceptions, GM crops are the most extensively tested crops ever added to our food supply. There are occasional claims that feeding GM foods to animals causes aberrations ranging from digestive disorders, to sterility, tumors and premature death. Although such claims are often sensationalized and receive a great deal of media attention, none have stood up to rigorous scientific scrutiny. Indeed, a recent review of a dozen well-designed long-term animal feeding studies comparing GM and non-GM potatoes, soy, rice, corn and triticale found that the GM and their non-GM counterparts are nutritionally equivalent.
Looking further at the demographics of respondents, the survey finds that those with a college degree are split on GMO safety: 49% say it’s generally safe while 47% say it’s generally unsafe. Women are more wary than men: only 28% of women think eating GM foods are safe compared to 47% of men. Race also divides the issue with blacks (24% say its safe) and Hispanics (32%) being more cautious than whites (41%).

The demographics of respondents on pesticide are quite similar to the responses on GMOs. More men say foods with pesticides are safe than women do. Those with more education are more likely to say food grown with pesticides are safe.

2015-01-29-seekinggmolabels.png

When it comes to GM labeling, exactly half of respondents said they “always” or “sometimes” check for a non-GMO label when they are shopping. Of course, those who check labels correlate higher with those who think genetically modified foods are unsafe to eat.

So why are citizens so out of step with scientists on GMO safety?

“One possible reason for the gap: when it comes to GM crops, two-thirds of the public say scientists do not have a clear understanding about the health effects,” surmised the researchers.

Yet, oddly enough for a society that doesn’t trust scientists on the GMO debate, science itself still holds an esteemed position in the minds of adults. Seventy-nine percent of respondents believe that science has contributed positively to society with 62% saying it has been beneficial for the quality of food. However, the percent of people who believe that science has contributed negatively to food is up 10 points from 2009: 34 percent of respondents say that science has had a negative affect on food.

The public also highly values government investment in science research: 71% support government-funded basic science research and 61% said government funding is essential for scientific progress.

Pew also asked scientists another question: How good is the general state of science is today? Scientists were more negative this year than they were in 2009. Only 52% say that it is a good time for science today while 74% said it was good in 2009.

2015-01-29-scientistsperpsective.png

And due to the public perception of GMOs at least, scientists’ more sober assessment might make sense.

Who’s to blame? Scientists (75%) say lack of STEM education in grades K-12 is the biggest culprit. The release of the next report is expected in mid-February.

How can scientists and the government bridge the disturbing literacy gap between the mainstream scientific community and a skeptical public? asks Alan Leshner, CEO of the AAAS, in an editorial accompanying the survey release?

Speaking up for the importance of science to society is our only hope, and scientists must not shy away from engaging with the public, even on the most polarizing science-based topics. Scientists need to speak clearly with journalists who provide a great vehicle for translating the nature and implications of their work. Scientists should also meet with members of the public and discuss what makes each side uncomfortable. In these situations, scientists must respond forthrightly to public concerns. In other words, there needs to be a conversation, not a lecture. The public’s perceptions of scientists’ expertise and trustworthiness are very important but they are not enough. Acceptance of scientific facts is not based solely on comprehension levels. It can be compromised anytime information confronts people’s personal, religious, or political views, and whenever scientific facts provoke fear or make people feel that they have no control over a situation. The only recourse is to have genuine, respectful dialogues with people.

Jon Entine, executive director of the Genetic Literacy Project, is a Senior Fellow at the World Food Center Institute for Food and Agricultural Literacy, University of California-Davis. Follow @JonEntine on Twitter.

 

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Surveying the Field: Super Bowl XLIXhttp://www.aei.org/publication/surveying-field-super-bowl-xlix/ http://www.aei.org/publication/surveying-field-super-bowl-xlix/#comments Fri, 30 Jan 2015 14:58:24 +0000 http://www.aei.org/?post_type=publication&p=829782 The Super Bowl is one of the most popular sporting events of the year. But how popular is football compared to other all-American sports, such as baseball or basketball? And how popular are the teams participating in this year’s game?

Since 1937, Gallup has asked Americans what their favorite sport is to watch. Since then, football, baseball, and basketball have been Americans’ top three responses—but not always in that order. In 1937, 34 percent of Americans said baseball was their favorite sport to watch, with 23% choosing football and 8% basketball. It was not until 1972 that football surpassed baseball as Americans’ favorite, with 32% choosing football and 24% baseball. The last time Gallup asked this question in 2013, 39% of Americans said football was their favorite sport to watch, far surpassing the 14% who chose baseball and the 12% who chose basketball (see featured graph).

It comes as no surprise, then, that a strong majority of Americans say they are fans of professional football. The last time Gallup asked this question in 2012, two-thirds (67%) gave that response.

Fan of professional football poll

As for this year’s competitors, one team is leading in the pre-game polls. In Public Policy Polling’s January 2015 combined telephone and online survey, 45% of voters had a favorable opinion of the Seattle Seahawks, compared with 30% who had a favorable opinion of the New England Patriots. Although the Seahawks are further down the field, there may be room for the Patriots to make a come-back: over a third of voters said they were not sure about how they felt about either team.

2015 Superbowl poll

According to the fans, the Seahawks look closer to making a first down. Thirty-six percent of voters said they would be rooting for Seattle, 35% were not sure, and 29% said the Patriots.

Superbowl winning team poll

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Obamacare’s bad math will force insurers to downgrade earningshttp://www.aei.org/publication/obamacares-bad-math-will-force-insurers-downgrade-earnings/ http://www.aei.org/publication/obamacares-bad-math-will-force-insurers-downgrade-earnings/#comments Fri, 30 Jan 2015 14:41:32 +0000 http://www.aei.org/?post_type=publication&p=829785 Some of the biggest health insurers are baking faulty math into their earnings forecasts by factoring in payments from Uncle Sam that may never materialize.

Two events this week could force a reckoning between their wishful arithmetic and common auditing standards – forcing insures to downgrade their earnings.

At issue are risk-sharing arrangements contained in Obamacare that are meant to help offset losses insures might take as the program gets started. Collectively, these programs have become known as “the three Rs” because of their three elements.

The first component is risk adjustment — a mechanism for transferring funds from plans that enroll low-risk members to plans that attract high cost enrollees. The second piece is a reinsurance scheme. The government will cover a percentage of the losses for high cost enrollees whose medical bills fall above a certain threshold.

It’s third element – the risk corridors — that’s likely to cause the earnings woes.

The idea here is to share the financial risk with Uncle Sam. If the actual medical claims for any individual Obamacare plan fall above or below 3% of some target amount, then the health plan will keep all the gains or losses itself. Here’s the rub. For anything outside that threshold, Uncle Sam will split the money with the health plan, essentially capping their upside and protecting their downside. Specifically, for the first 5% of gains or losses, the government will split it 50/50 with the plans. For anything above that, the government will take 80% of the extra gains or losses.

The controversial wrinkle is this: By the estimation of many, the program was intended to be budget neutral – basically paying for itself by transferring money from insurers that made profits to those that did not. The problem was that there weren’t enough Obamacare plans making money to fund the kitty. So like many other parts of Obamacare, the President re-interpreted the rules, and said that the risk corridors could be funded off taxpayer money that was skimmed from other programs. In other words, the monetary obligations would become open ended.

So Republicans tacked on a measure to the stopgap “Omnibus” spending bill last month to cap that probable spending. It requires the risk corridors to be budget neutral in each of the three years that the money is available, from 2014-2016.

While most of the public health plans have told investors that they have not accrued much for risk corridors receivables in 2014, there are some notable exceptions. The biggest may be Humana. Moreover, even for the insurers that aren’t planning on getting big checks, across the board, the managed care industry’s pricing in the public exchanges was more competitive than many expected for 2015.

Analysts widely believe that the health plans drew increased comfort that their downside margins would be protected by the promise of federal funding from the risk corridors, and the willingness of the Obama team to turn this into an open ended entitlement. That money is believed to be a key reason why the insurers were able to hold down their 2015 rate increases for the Obamacare plans. If the money doesn’t materialize, those thinly priced plans could generate excess losses.

Humana provides a good example of how much this money factors into the health plans’ analysis. According to analysts at Deutsche Bank , Humana’s 2015 guidance shows a benefit from the 3Rs of roughly $325-400 million. Assuming an equal split between risk adjustment and risk corridors, the loss of federal funding comes out to about a 2% hit to the company’s earnings guidance. That’s how much Humana could stand to lose if the company is unable to access taxpayer funding as a way to subsidize these payments. The earnings hit could total as much as 4% for 2014.

Cigna and Health Net are two of the other big insurers that also seem to have bet more heavily on money from the risk corridors. Other health plans have budgeted more conservatively. United Healthcare, for example, projected very little money from the programs.

Two recent events may force all of the health plans that incorporated the risk corridor money into their earnings to issue revisions to those forecasts.

First, the Congressional Budget Office downgraded its categorization of the risk corridor program in the federal budget, changing it to discretionary from mandatory. This is a clear declaration that will reinforce the view that the money may never materialize. Auditors will have to take note of this formal change. The CBO also reduced its projected spending from the risk corridor program for 2015-2017 to $5 billion, from an earlier estimate of $9 billion. This is another explicit signal that CBO believes that potential the funding stream may be over-estimated.

The uncertainty of this funding was underscored by another event this week: the planned liquidation of the CoOportunity Health co-op in Iowa and Nebraska. In that unfolding process, auditors determined that the large risk corridor receivable that the co-op was carrying on its balance sheet was now in jeopardy of non-payment from CMS due to the statutory changes made to the program in the Omnibus.

This reckoning by audit firms could likely force the hands of other health insurers to make similar revisions to their own projections. Plans that were relying more heavily on money from the 3Rs could find that they need to lower their earnings forecasts as a result, and take a charge for 2014 on money that doesn’t materialize. In the case of CoOportunity, auditors clearly concluded that the new legislation meant that the insurer could no longer accrue for the risk corridor money.

The risk corridors were made controversial precisely because the Obama Administration seemed to change the program’s rules of math, turning it from a provision that was widely perceived as budget neutral, into an open ended subsidy.

The Omnibus measure made it harder for CMS to skirt the program’s spending rails, ending what many argued was a bailout for the health plans. Now the hopeful projections that those plans made will be squared with the normal rules of math.

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Remarks prepared for delivery: Senate Finance Committee Chairman Orrin Hatch on how America can succeed in today’s global economyhttp://www.aei.org/press/remarks-prepared-delivery-senate-finance-committee-chairman-orrin-hatch-america-can-succeed-todays-global-economy/ http://www.aei.org/press/remarks-prepared-delivery-senate-finance-committee-chairman-orrin-hatch-america-can-succeed-todays-global-economy/#comments Fri, 30 Jan 2015 14:22:50 +0000 http://www.aei.org/?post_type=press&p=829771 I really appreciate AEI for giving me this chance to share my thoughts about our nation’s trade agenda, where it is today, and where I think it should be going in the future.

This is an especially exciting time to be discussing U.S. trade policy.

With two of the most ambitious trade agreements in our nation’s history, the Trans-Pacific Partnership, or TPP, and the Trans-Atlantic Trade and Investment Partnership, or TTIP, under active negotiation, the U.S. trade agenda is truly at the precipice of opportunity. The only question is whether the administration and both parties in Congress can work together to seize this opportunity.

I know that, these days, there are many – probably even some in this audience – who view bipartisanship in the same way others view winning the lottery. Sure, it’d be nice if it happened, but there’s no use waiting around for it.

And, on many issues, they’d be right.

But, fortunately, trade is one area where there does seem to be a broad, and increasing, bipartisan consensus to get something done.

How refreshing is that?

Today I want to talk about what we need to do to get these two agreements across the finish line and what those agreements must look like to gain my active support once they’re submitted to Congress.

First, I want to assure all of you that, as the new Chairman of the Senate Finance Committee, my goal is to advance a broad and ambitious trade agenda, including renewing the Generalized System of Preferences, extending the African Growth and Opportunity Act, passing legislation to enable enactment of Miscellaneous Tariff Bills, and reauthorizing our Customs and Border Patrol.

All of these are priorities for me and for the Finance Committee in this new Congress.
Today, however, I want to focus on two things: Trade Promotion Authority, or TPA, and how it sets out what TPP and TTIP must achieve to gain my active support.

Last year, I, along with the two former chairmen – Max Baucus and Dave Camp – introduced the Bipartisan Congressional Trade Priorities Act of 2014. Our bill would have renewed TPA, and it outlined the objectives our trade negotiators must meet in order for a final agreement to be approved by Congress.

That bill, in my opinion, represents the best starting point for our efforts in this Congress. So, much of my comments today will be focused on the substance of that legislation.

As many of you know, I am currently working with Ranking Member Wyden and House Ways and Means Chairman Ryan to introduce a TPA bill for this Congress. While there may be some changes, I think the fundamentals we will be discussing today will be substantially the same.

Let’s start by discussing some of the principles that guided our efforts last year as we worked on legislation to renew TPA.

In developing the 2014 bill, I had several major objectives in mind.

First, I wanted to preserve the fundamental principles of U.S. trade and economic policy that have enabled our country to grow and thrive over the past century.

Second, I wanted to make sure we recognized and addressed new opportunities and challenges that our job creators and workers face when doing business around the globe.

And, finally, I wanted to rebalance the relationship between Congress and the Executive Branch when negotiating, implementing, and enforcing international trade agreements.

These continue to be my main objectives as I work with my colleagues on new TPA legislation in the 114th Congress.

To provide more detail, let’s delve a little deeper into each of these objectives.

Objective Number One is: Preserving the fundamental principles of U.S. trade and economic policy.

With our bill, the first fundamental principle I sought to preserve was strong intellectual property rights protection. Intellectual property is the backbone of our economy. It affects large and small companies across America.

In my home state of Utah, for example, half a million jobs and 67 percent of our exports are connected to intellectual property.

Unfortunately, intellectual property protections around the globe are continually at risk. The U.S. Government has an obligation to ensure that the creative capital of our artists and innovators is protected.

This is a long-standing principle. In fact, our Founding Fathers believed intellectual property to be so fundamental to America’s future prosperity that they explicitly granted Congress the constitutional authority to protect it.

That’s what I wanted to do with our legislation.

So I worked hard to make sure that our 2014 bill maintained the strong intellectual property standards found in the prior 2002 Trade Promotion Authority law. This included requiring that trade agreements meet the high standards found in U.S. law, particularly the enforcement obligations. It also included requiring the elimination of price controls and reference pricing, which are used by many countries to deny full market access to innovative pharmaceuticals and medical devices.

Our bill then went further than the 2002 law by calling for an end to government involvement in intellectual property rights violations, including piracy and cyber theft. This was the first time TPA legislation addressed these issues. We also sought to stop foreign-government theft of trade secrets, by including provisions that governments limit the unnecessary collection of trade secret information and protect any information that they do collect from disclosure.

Our legislation further directed the administration to ensure that regulatory reimbursement regimes that make pricing and reimbursement decisions are transparent, provide procedural fairness, are non-discriminatory, and provide full market access for American products.

The bill also called for the elimination of measures that require U.S. companies to locate their intellectual property abroad as a market-access or investment condition.

Finally, the bill included an expanded capacity-building objective directing the administration to work with U.S. trading partners to strengthen not only their labor laws, as was provided for in 2002, but also their intellectual property rights laws.

Put simply, for any future trade agreement to win my approval, it must meet these standards. And, I expect that they will.

For TPP, I fully expect to see intellectual property provisions that are similar to the standards found in U.S. law, resulting in an agreement containing a very high standard of intellectual property rights protection. This includes twelve years of regulatory data protection for biologics and strong copyright and trademark protections.

The intellectual property provisions of TPP must also effectively address the theft of trade secrets and ensure effective implementation and enforcement of IP obligations. In addition, we must ensure that U.S. innovators are able to monetize the fruits of their labor when they export them to other markets. That is why it is critical for TPP to ensure transparency and procedural fairness in the process by which reimbursement decisions are made regarding medical devices and pharmaceuticals.

Strong intellectual property protections in the context of our TTIP negotiations with Europe are also a priority.

Most European countries already have a very high standard of IP protection. Because the U.S. and the E.U. are two of the most innovative economies in the world, any successful TTIP agreement must promote the highest standards of intellectual property protection.

In addition, our negotiators must strongly promote and protect the interests of our citizens with respect to Europe’s approach to geographical indications, the improper use of which impedes our ability to compete not only in Europe, but in many parts of the world.

As you can probably tell, intellectual property rights are a high priority for me. But they are not the only priority I have when it comes to trade.

Another fundamental principle of trade policy that I wanted to protect with our legislation was strong support of services and investment, including maintaining strong investor-state dispute settlement provisions.

Our 2014 bill sought fair, non-discriminatory treatment for U.S. investors pursuing opportunities overseas. It would have required trade agreements to ensure that U.S. investors overseas receive the same basic protections that the United States gives to investors, foreign and domestic, here at home.

All of these elements foster stronger legal regimes and more secure economic environments around the world, which is necessary for U.S. businesses to pursue opportunities abroad and to be treated fairly when doing so.

Investor-state dispute settlement provisions are subject to a lot of overheated and misguided criticism. So let me be clear: The investor-state rules I am talking about simply ensure that other countries adopt and implement the basic, fundamental protections that underpin U.S. commercial law, including protection against discrimination, protection against repudiation of contracts, and protection against expropriation without due process and compensation.

Because I believe that these principles are the foundation on which American businesses can build opportunities overseas, I will continue to insist that investor-state disciplines not be weakened in any of our trade agreements. That means both TPP and TTIP must have strong investor-state dispute settlement mechanisms.

No trading partner should be given a pass to violate these fundamental legal principles for investors without enforcement. Nor should any U.S. industry, including tobacco, be excluded from receiving these basic protections.

A third fundamental principle I sought to maintain in our bill – and the last one I’ll talk about today – was real and comprehensive market access opportunities for U.S. goods and services. That means significant reduction, and ultimately, elimination of tariffs on U.S. exports of goods, services and agricultural products.

Several countries who are parties to TPP are resisting our efforts to open agricultural markets, including Japan and Canada.

Let me be clear: If Japan, Canada and our other TPP partners are not willing to open their markets to our exports, the final agreement will never receive support in Congress.
In our negotiations with the European Union we should also strive for complete elimination of tariffs. While tariff levels may already be low, the gains to be achieved from total elimination of tariffs would be significant, as total goods trade alone between the U.S. and E.U. is over one trillion dollars a year.

We also need to see a comprehensive agreement in TTIP, with no sectors excluded from coverage, including audiovisual and financial services. The agreement should also work towards regulatory coherence of financial regulations.

I think that’ll about cover my first objective. And, I think you all get the point: It is vital that, in our future trade agreements, we preserve the fundamentals of U.S. trade and economic policy.

So, let’s turn to Objective Number Two: Recognizing and addressing the opportunities and challenges our job creators and workers face doing business around the world.

The world has changed since the last time Congress passed a TPA bill. The world of 2015 is, in many ways, vastly different than the world of 2002.

Let’s start with digital trade.

Here, we have a complete revision of the 2002 law, reflecting the increasing importance of digital trade to the U.S. economy, and the central role the internet plays as a platform in international commerce.

In our bill, we included language to ensure that all trade agreement obligations relating to trade in goods and services apply equally to goods and services traded digitally. The bill also would have directed our negotiators to ensure that foreign governments do not impede cross-border data flows and refrain from instituting other impediments to digital trade. Finally, we specifically addressed the need for the U.S. government to pursue policies that eliminate forced localization requirements, including requirements for local storage or processing of data.

Although many of these issues are new, I fully expect agreements reached through the TPP and TTIP negotiations to reflect these priorities.

Another increasingly difficult problem our companies face is unfair competition from state-owned enterprises. So, for the first time, our TPA bill sought the elimination of trade distortions and unfair competition by state-owned enterprises, and to ensure that they act based solely on commercial considerations.

I want American businesses to be able to compete anywhere in the world. But we can’t expect our businesses to go head-to-head and win against state-owned enterprises that are protected from competition and market forces by their governments. That is why it is essential for TPP, and future U.S. trade agreements, to take this issue head on and to ensure that if foreign governments are going to maintain state-owned enterprises, those entities must act on a commercial basis.

Our job creators and workers also need to have confidence that their hard work is not being unfairly harmed by currency manipulation.

The Obama Administration has done such a poor job here that many members of Congress simply don’t have confidence that this problem is being properly addressed.
Frankly, I understand their frustration.

That is why we included within our TPA bill, for the first time, a new principal negotiating objective addressing currency manipulation.

We need to see commitments from our partners in ongoing trade negotiations to avoid manipulating exchange rates to gain an unfair competitive advantage over other parties to the agreement, a standard reflecting commitments parties have made in the International Monetary Fund.

It is essential that Congress know how the administration intends to address this problem in ongoing negotiations. Pretending these concerns don’t exist will not suffice. The administration must engage much more effectively with Congress on this issue if they want to receive strong support for TPA and any subsequent trade agreements.

This brings us to the third major objective I had drafting our bill in 2014: Rebalancing the relationship between Congress and the Executive Branch in trade negotiations.

Of course, the first step here is to renew Trade Promotion Authority. Our trade negotiators and trading partners need clear objectives from Congress. The best way to communicate those objectives and give them force is TPA.

I am perplexed by arguments some make that TPA gives away Congress’ power. The reality is quite the opposite – TPA empowers Congress, expanding and enhancing its role in ongoing international trade negotiations.

I’ve just gone through a number of very specific policies that Congress should insist upon in our trade agreements – from intellectual property rights protection to protections against currency manipulation. The only way Congress can direct the administration to address these policies in their trade negotiations is through TPA.

In developing the 2014 bill, I insisted upon including a number of new provisions that substantially enhance Congress’ role without jeopardizing the ability of our country to negotiate and enact strong trade agreements.

For example, the bill tightened the scope of qualifying implementing bills to “only such provisions as are strictly necessary or appropriate to implement” trade agreements. It provided that any commitments that are not disclosed to the Congress before an implementing bill is introduced are not to be considered part of the agreement and have no force of law.

We also included new provisions to ensure that the agreements be concluded within the time frame provided by Congress and that substantial modifications or additions after that date are not eligible for approval under the trade authorities procedures provided by TPA. The bill included a number of new elements to enhance consultation and oversight throughout the negotiating and implementation process.

All in all, we crafted a very strong bill, building and improving upon decades of precedent found in prior TPA bills.

Like I said, I believe the bill we introduced in the last Congress should be the starting point for our efforts to pass TPA this year. The objectives that I’ve laid out today are every bit as relevant to my efforts to work with my colleagues to produce new legislation for this Congress. I am very hopeful that we will be able to accommodate some of the issues raised by Ranking Member Wyden and get a new TPA bill introduced in short order.

Once that is achieved, I plan to move very quickly to get the bill out of the Finance Committee and onto the Senate floor.

We have been without TPA, our most important tool to open markets, for far too long.
And, while we sit back, other countries forge ahead, cutting tariffs and other barriers for their exporters, hurting our ability to fairly compete and access opportunities.

The U.S. needs to lead on trade. We need to establish rules that hold other nations accountable for their unfair trade practices. And we need to tear down barriers that block our goods from foreign markets.

We can only do that if we renew TPA and do so soon.

It’s going to take a lot of work. As I said at the beginning of my remarks, it’s going to take no small amount of bipartisanship – from Capitol Hill all the way to the White House – to get this done.

With your help and support, I know we can be successful.

Thank you, once again, to AEI for having me here today. It’s always a privilege to be here.

And, thank you all for taking the time to listen.

God bless you all.

###

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Trade in 2015http://www.aei.org/publication/trade-2015/ http://www.aei.org/publication/trade-2015/#comments Fri, 30 Jan 2015 14:00:21 +0000 http://www.aei.org/?post_type=publication&p=829775 I really appreciate AEI for giving me this chance to share my thoughts about our nation’s trade agenda, where it is today, and where I think it should be going in the future.

This is an especially exciting time to be discussing U.S. trade policy.

With two of the most ambitious trade agreements in our nation’s history, the Trans-Pacific Partnership, or TPP, and the Trans-Atlantic Trade and Investment Partnership, or TTIP, under active negotiation, the U.S. trade agenda is truly at the precipice of opportunity. The only question is whether the administration and both parties in Congress can work together to seize this opportunity.

I know that, these days, there are many – probably even some in this audience – who view bipartisanship in the same way others view winning the lottery. Sure, it’d be nice if it happened, but there’s no use waiting around for it.

And, on many issues, they’d be right.

But, fortunately, trade is one area where there does seem to be a broad, and increasing, bipartisan consensus to get something done.

How refreshing is that?

Today I want to talk about what we need to do to get these two agreements across the finish line and what those agreements must look like to gain my active support once they’re submitted to Congress.

First, I want to assure all of you that, as the new Chairman of the Senate Finance Committee, my goal is to advance a broad and ambitious trade agenda, including renewing the Generalized System of Preferences, extending the African Growth and Opportunity Act, passing legislation to enable enactment of Miscellaneous Tariff Bills, and reauthorizing our Customs and Border Patrol.

All of these are priorities for me and for the Finance Committee in this new Congress.
Today, however, I want to focus on two things: Trade Promotion Authority, or TPA, and how it sets out what TPP and TTIP must achieve to gain my active support.

Last year, I, along with the two former chairmen – Max Baucus and Dave Camp – introduced the Bipartisan Congressional Trade Priorities Act of 2014. Our bill would have renewed TPA, and it outlined the objectives our trade negotiators must meet in order for a final agreement to be approved by Congress.

That bill, in my opinion, represents the best starting point for our efforts in this Congress. So, much of my comments today will be focused on the substance of that legislation.

As many of you know, I am currently working with Ranking Member Wyden and House Ways and Means Chairman Ryan to introduce a TPA bill for this Congress. While there may be some changes, I think the fundamentals we will be discussing today will be substantially the same.

Let’s start by discussing some of the principles that guided our efforts last year as we worked on legislation to renew TPA.

In developing the 2014 bill, I had several major objectives in mind.

First, I wanted to preserve the fundamental principles of U.S. trade and economic policy that have enabled our country to grow and thrive over the past century.

Second, I wanted to make sure we recognized and addressed new opportunities and challenges that our job creators and workers face when doing business around the globe.

And, finally, I wanted to rebalance the relationship between Congress and the Executive Branch when negotiating, implementing, and enforcing international trade agreements.

These continue to be my main objectives as I work with my colleagues on new TPA legislation in the 114th Congress.

To provide more detail, let’s delve a little deeper into each of these objectives.

Objective Number One is: Preserving the fundamental principles of U.S. trade and economic policy.

With our bill, the first fundamental principle I sought to preserve was strong intellectual property rights protection. Intellectual property is the backbone of our economy. It affects large and small companies across America.

In my home state of Utah, for example, half a million jobs and 67 percent of our exports are connected to intellectual property.

Unfortunately, intellectual property protections around the globe are continually at risk. The U.S. Government has an obligation to ensure that the creative capital of our artists and innovators is protected.

This is a long-standing principle. In fact, our Founding Fathers believed intellectual property to be so fundamental to America’s future prosperity that they explicitly granted Congress the constitutional authority to protect it.

That’s what I wanted to do with our legislation.

So I worked hard to make sure that our 2014 bill maintained the strong intellectual property standards found in the prior 2002 Trade Promotion Authority law. This included requiring that trade agreements meet the high standards found in U.S. law, particularly the enforcement obligations. It also included requiring the elimination of price controls and reference pricing, which are used by many countries to deny full market access to innovative pharmaceuticals and medical devices.

Our bill then went further than the 2002 law by calling for an end to government involvement in intellectual property rights violations, including piracy and cyber theft. This was the first time TPA legislation addressed these issues. We also sought to stop foreign-government theft of trade secrets, by including provisions that governments limit the unnecessary collection of trade secret information and protect any information that they do collect from disclosure.

Our legislation further directed the administration to ensure that regulatory reimbursement regimes that make pricing and reimbursement decisions are transparent, provide procedural fairness, are non-discriminatory, and provide full market access for American products.

The bill also called for the elimination of measures that require U.S. companies to locate their intellectual property abroad as a market-access or investment condition.

Finally, the bill included an expanded capacity-building objective directing the administration to work with U.S. trading partners to strengthen not only their labor laws, as was provided for in 2002, but also their intellectual property rights laws.

Put simply, for any future trade agreement to win my approval, it must meet these standards. And, I expect that they will.

For TPP, I fully expect to see intellectual property provisions that are similar to the standards found in U.S. law, resulting in an agreement containing a very high standard of intellectual property rights protection. This includes twelve years of regulatory data protection for biologics and strong copyright and trademark protections.

The intellectual property provisions of TPP must also effectively address the theft of trade secrets and ensure effective implementation and enforcement of IP obligations. In addition, we must ensure that U.S. innovators are able to monetize the fruits of their labor when they export them to other markets. That is why it is critical for TPP to ensure transparency and procedural fairness in the process by which reimbursement decisions are made regarding medical devices and pharmaceuticals.

Strong intellectual property protections in the context of our TTIP negotiations with Europe are also a priority.

Most European countries already have a very high standard of IP protection. Because the U.S. and the E.U. are two of the most innovative economies in the world, any successful TTIP agreement must promote the highest standards of intellectual property protection.

In addition, our negotiators must strongly promote and protect the interests of our citizens with respect to Europe’s approach to geographical indications, the improper use of which impedes our ability to compete not only in Europe, but in many parts of the world.

As you can probably tell, intellectual property rights are a high priority for me. But they are not the only priority I have when it comes to trade.

Another fundamental principle of trade policy that I wanted to protect with our legislation was strong support of services and investment, including maintaining strong investor-state dispute settlement provisions.

Our 2014 bill sought fair, non-discriminatory treatment for U.S. investors pursuing opportunities overseas. It would have required trade agreements to ensure that U.S. investors overseas receive the same basic protections that the United States gives to investors, foreign and domestic, here at home.

All of these elements foster stronger legal regimes and more secure economic environments around the world, which is necessary for U.S. businesses to pursue opportunities abroad and to be treated fairly when doing so.

Investor-state dispute settlement provisions are subject to a lot of overheated and misguided criticism. So let me be clear: The investor-state rules I am talking about simply ensure that other countries adopt and implement the basic, fundamental protections that underpin U.S. commercial law, including protection against discrimination, protection against repudiation of contracts, and protection against expropriation without due process and compensation.

Because I believe that these principles are the foundation on which American businesses can build opportunities overseas, I will continue to insist that investor-state disciplines not be weakened in any of our trade agreements. That means both TPP and TTIP must have strong investor-state dispute settlement mechanisms.

No trading partner should be given a pass to violate these fundamental legal principles for investors without enforcement. Nor should any U.S. industry, including tobacco, be excluded from receiving these basic protections.

A third fundamental principle I sought to maintain in our bill – and the last one I’ll talk about today – was real and comprehensive market access opportunities for U.S. goods and services. That means significant reduction, and ultimately, elimination of tariffs on U.S. exports of goods, services and agricultural products.

Several countries who are parties to TPP are resisting our efforts to open agricultural markets, including Japan and Canada.

Let me be clear: If Japan, Canada and our other TPP partners are not willing to open their markets to our exports, the final agreement will never receive support in Congress.
In our negotiations with the European Union we should also strive for complete elimination of tariffs. While tariff levels may already be low, the gains to be achieved from total elimination of tariffs would be significant, as total goods trade alone between the U.S. and E.U. is over one trillion dollars a year.

We also need to see a comprehensive agreement in TTIP, with no sectors excluded from coverage, including audiovisual and financial services. The agreement should also work towards regulatory coherence of financial regulations.

I think that’ll about cover my first objective. And, I think you all get the point: It is vital that, in our future trade agreements, we preserve the fundamentals of U.S. trade and economic policy.

So, let’s turn to Objective Number Two: Recognizing and addressing the opportunities and challenges our job creators and workers face doing business around the world.

The world has changed since the last time Congress passed a TPA bill. The world of 2015 is, in many ways, vastly different than the world of 2002.

Let’s start with digital trade.

Here, we have a complete revision of the 2002 law, reflecting the increasing importance of digital trade to the U.S. economy, and the central role the internet plays as a platform in international commerce.

In our bill, we included language to ensure that all trade agreement obligations relating to trade in goods and services apply equally to goods and services traded digitally. The bill also would have directed our negotiators to ensure that foreign governments do not impede cross-border data flows and refrain from instituting other impediments to digital trade. Finally, we specifically addressed the need for the U.S. government to pursue policies that eliminate forced localization requirements, including requirements for local storage or processing of data.

Although many of these issues are new, I fully expect agreements reached through the TPP and TTIP negotiations to reflect these priorities.

Another increasingly difficult problem our companies face is unfair competition from state-owned enterprises. So, for the first time, our TPA bill sought the elimination of trade distortions and unfair competition by state-owned enterprises, and to ensure that they act based solely on commercial considerations.

I want American businesses to be able to compete anywhere in the world. But we can’t expect our businesses to go head-to-head and win against state-owned enterprises that are protected from competition and market forces by their governments. That is why it is essential for TPP, and future U.S. trade agreements, to take this issue head on and to ensure that if foreign governments are going to maintain state-owned enterprises, those entities must act on a commercial basis.

Our job creators and workers also need to have confidence that their hard work is not being unfairly harmed by currency manipulation.

The Obama Administration has done such a poor job here that many members of Congress simply don’t have confidence that this problem is being properly addressed.
Frankly, I understand their frustration.

That is why we included within our TPA bill, for the first time, a new principal negotiating objective addressing currency manipulation.

We need to see commitments from our partners in ongoing trade negotiations to avoid manipulating exchange rates to gain an unfair competitive advantage over other parties to the agreement, a standard reflecting commitments parties have made in the International Monetary Fund.

It is essential that Congress know how the administration intends to address this problem in ongoing negotiations. Pretending these concerns don’t exist will not suffice. The administration must engage much more effectively with Congress on this issue if they want to receive strong support for TPA and any subsequent trade agreements.

This brings us to the third major objective I had drafting our bill in 2014: Rebalancing the relationship between Congress and the Executive Branch in trade negotiations.

Of course, the first step here is to renew Trade Promotion Authority. Our trade negotiators and trading partners need clear objectives from Congress. The best way to communicate those objectives and give them force is TPA.

I am perplexed by arguments some make that TPA gives away Congress’ power. The reality is quite the opposite – TPA empowers Congress, expanding and enhancing its role in ongoing international trade negotiations.

I’ve just gone through a number of very specific policies that Congress should insist upon in our trade agreements – from intellectual property rights protection to protections against currency manipulation. The only way Congress can direct the administration to address these policies in their trade negotiations is through TPA.

In developing the 2014 bill, I insisted upon including a number of new provisions that substantially enhance Congress’ role without jeopardizing the ability of our country to negotiate and enact strong trade agreements.

For example, the bill tightened the scope of qualifying implementing bills to “only such provisions as are strictly necessary or appropriate to implement” trade agreements. It provided that any commitments that are not disclosed to the Congress before an implementing bill is introduced are not to be considered part of the agreement and have no force of law.

We also included new provisions to ensure that the agreements be concluded within the time frame provided by Congress and that substantial modifications or additions after that date are not eligible for approval under the trade authorities procedures provided by TPA. The bill included a number of new elements to enhance consultation and oversight throughout the negotiating and implementation process.

All in all, we crafted a very strong bill, building and improving upon decades of precedent found in prior TPA bills.

Like I said, I believe the bill we introduced in the last Congress should be the starting point for our efforts to pass TPA this year. The objectives that I’ve laid out today are every bit as relevant to my efforts to work with my colleagues to produce new legislation for this Congress. I am very hopeful that we will be able to accommodate some of the issues raised by Ranking Member Wyden and get a new TPA bill introduced in short order.

Once that is achieved, I plan to move very quickly to get the bill out of the Finance Committee and onto the Senate floor.

We have been without TPA, our most important tool to open markets, for far too long.
And, while we sit back, other countries forge ahead, cutting tariffs and other barriers for their exporters, hurting our ability to fairly compete and access opportunities.

The U.S. needs to lead on trade. We need to establish rules that hold other nations accountable for their unfair trade practices. And we need to tear down barriers that block our goods from foreign markets.

We can only do that if we renew TPA and do so soon.

It’s going to take a lot of work. As I said at the beginning of my remarks, it’s going to take no small amount of bipartisanship – from Capitol Hill all the way to the White House – to get this done.

With your help and support, I know we can be successful.

Thank you, once again, to AEI for having me here today. It’s always a privilege to be here.

And, thank you all for taking the time to listen.

God bless you all.

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Trade in 2015: Senate Finance Committee Chairman Orrin Hatch on how America can succeed in today’s global economyhttp://www.aei.org/events/trade-2015-senate-finance-committee-chairman-orrin-hatch-america-can-succeed-todays-global-economy/ http://www.aei.org/events/trade-2015-senate-finance-committee-chairman-orrin-hatch-america-can-succeed-todays-global-economy/#comments Thu, 22 Jan 2015 19:38:14 +0000 http://www.aei.org/?post_type=event&p=828719 Event Description

International trade and the US economy are top issues in the 114th Congress. We welcome you to join us at AEI as Senate Finance Committee Chairman Orrin Hatch (R-UT) outlines his vision for how America can succeed in today’s global economy. Sen. Hatch will speak to his longstanding efforts to renew Trade Promotion Authority and will discuss what the Obama administration must do to get ongoing trade negotiations such as the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership successfully enacted by Congress.

Read Chairman Hatch’s remarks as prepared for delivery here.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.

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Gathering storm clouds over Athenshttp://www.aei.org/publication/gathering-storm-clouds-athens/ http://www.aei.org/publication/gathering-storm-clouds-athens/#comments Fri, 30 Jan 2015 13:00:33 +0000 http://www.aei.org/?post_type=publication&p=829733 It is difficult to see how Greece’s newly elected government could have got off to a worse start. In the short space of four days after being elected, it has managed to antagonize its official creditors on whom Greece still remains so highly dependent. It has also managed to roil Greece’s financial markets as well as to incur harsh warnings from its rating agencies. All of this is highly suggestive of Greece rapidly moving towards a full-blown financial crisis that could force Greece out of the Euro well before year-end.

Evidently Alexis Tsipras, Greece’s new and inexperienced prime minister, does not believe that one should not bite the hand that feeds it. As his first official act as prime minister, he chose to lay a wreath at the tomb of 200 Communist partisans, who were murdered by the Nazi’s during second-world war. Needless to say, this provocative act did not go unnoticed in Berlin, the capital city of Greece’s principal paymaster.

Nor did Mr. Tsipras’ first substantive foreign policy action play well in Berlin and Brussels. In a seeming act of defiance, the new-Greek government has made it clear that it does not share the European Union’s Russian sanction policy. Indeed, in an act that is widely being interpreted as the new Greek government cozying up to the Russians, Greece has intimated that it will veto further European Russian sanctions.

If Mr. Tsipras’ foreign policy actions are likely to cause frictions with Greece’s official creditors, his febrile actions in the area of economic policy are certain to do so. Firstly, he chose as his coalition partner the extreme-right Independent Greeks, whose only point in common with Mr. Tsipras’ far-left Syriza party is anti-austerity stance. Secondly, he chose as his Minister of Finance Yanis Varoufakis, a self-avowed “Marxist-libertarian” who is not known for restraint in his hostility to Greece’s bailout program.

Thirdly, and most importantly, he has reiterated his intention to reverse the austerity policy imposed on Greece and he has chosen to roll back key reforms requested by the much reviled troika. Among the measures that he has already announced are the scrapping of hospital and prescription fees, a 13th month pension for low income pensioners, reinstating sacked public sector employees, halting the privatization program, raising the minimum wage, and reinstalling collective bargaining.

Not surprisingly, markets have reacted with dismay to the clearest of signs that the new-Greek government is not about to make the major U-turn in policies that is required for Greece to continue enjoying ECB and IMF backing. Over the past three days, Greek bank stocks lost more than 25 percent of their value, while three-year Greek government borrowing costs have now increased to over 17 percent. More ominously still, there are now clear signs of an incipient bank run. Over the past month, the Greek banking system is reported to have lost EUR11 billion in deposits, with the pace of deposit withdrawal picking up over the past week.

The only rational explanation for Mr. Tsipras’ actions to date is that he truly believes that Greece can act with impunity and that its official creditors will continue to finance it. Sadly, this is all too likely to prove to be a gross miscalculation that will cost both Greece and the rest of the Eurozone dearly. It overlooks the fact that German Chancellor Angela Merkel risks the wrath of her electorate if Germany is seen to be caving into an unreformed Greece’s extravagant demands. It also overlooks the fact that Mrs. Merkel will be highly reluctant to make generous concessions to Greece, as she knows full well that she would then be forced to concede similar concessions to the rest of the Eurozone’s peripheral countries.

Judging by the acute unease of markets and of Greek bank depositors, Greece does not have the luxury of time on its side. Indeed, if Greece wishes to stay in the Euro its government not only needs to do a major U-turn, but it needs to do so before a full-scale bank run gets underway. Hopefully, the Greek government’s initial missteps will soon be corrected. However, I am not holding my breath.

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Friday morning linkshttp://www.aei.org/publication/thursday-night-links-8/ http://www.aei.org/publication/thursday-night-links-8/#comments Fri, 30 Jan 2015 04:59:17 +0000 http://www.aei.org/?post_type=publication&p=829748 ...]]]> usoil

1. Chart of the Day I. The EIA reported yesterday that US oil production increased last week to 9.21 million barrels per day, the highest level of domestic crude oil production since October 1973, more than 41 years ago. Peak what?

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2. Chart of the Day II. Largely because of the American Shale Revolution, the US produced 88.5% of the energy consumed last year (through October) which was the highest level of energy self-sufficiency since 1985, almost 30 years ago.

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3. Chart of the Day III. The US homeownership rate fell t0 a 25-year low in the fourth quarter of last year at 63.9% (seasonally adjusted) — the lowest rate since Q4 1989, according to Census data released today. So the rate of homeownerhip is back to where it started before the political obsession with homeownerhsip turned millions of good renters into bad homeowners as government housing finance policies pressured forced lenders to lower credit standards, income requirements, and down payments to what would otherwise have been unqualified home buyers. After a housing bubble, mortgage meltdown, financial crisis and a homeownership rate approaching 70%, we’ve returned to the homeownership rate of the mid-1980s.

4. Despite What You Learned in School and What You Hear from the Media: The overall impact of fossil fuels on environmental quality is tremendously positive, explains Alex Epstein in his Forbes article “How Fossil Fuels Cleaned Up Our Environment.”

5. Who’d a-Thunk It? Despite sitting on the largest oil reserves in the world, socialist Venezuela has food shortages, long lines, rationing, and rioting? Check out some amazing videos of how the Venezuelan people are suffering from chronic food shortages caused by the socialist government’s policies here, here, here and here. Total chaos and misery only begin to describe how bad it is for the people of Venezuela, who are now banned by the government from filming the long lines, empty shelves, food rioting, etc. (HT: Hitssquad)

6.  The “Uber Effect”: Since Uber started operating in Seattle in 2013, there’s been a 10% decrease in DUIs.

7. A Model for Governments Everywhere: In response to Uber ride-sharing drivers now working in the city, the Portsmouth (NH) Taxi Commission recommended the elimination of taxi medallions, regulation of taxi fares, city taxi inspections and the Taxi Commission itself. We need more of this……..

8. Significant Music Inequality: The top 1% of bands and solo artists now earn 80% of all revenue from recorded music. Wait until Oxfam and the Democrats find out….

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9. Google Search Trends: Searches for the term “Peak Oil” peaked in August 2005 while searches for the word “Fracking” peaked in August 2013.

10. Video of the Day. In the latest Factual Feminist video, we learn from Christina Sommers that the United States is not a rape culture, but it is a gender propaganda culture. We are overwhelmed by false information about men and women, and nowhere is this more true than in the area of sexual violence, says Christina Sommers in the video below:

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