January 15, 2019
The Blue Wave brings a different perspective to this Congress. It’s an opportunity to generate compelling policy proposals while holding the Administration accountable.
While this is not a comprehensive agenda, CEPR is pleased to share its domestic policy priorities with the change makers of the 116th Congress. These policies reflect the groundbreaking, rigorous research that CEPR uses to benefit workers and their families and to improve economic equity, corporate governance, government oversight, economic performance.
Benefits
Paid medical and family leave via the reintroduction of the FAMILY Act together with amendments to make it more useful for lower-income workers and workers of color. Amendments aim to:
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Provide graduated wage replacement rates, with the lowest-paid workers receiving 90 percent of weekly pay. Low-income workers can’t afford to live on two-thirds of weekly pay.
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Broaden the definition of family to better reflect the diversity of today’s blended and multigenerational families. Siblings who care for each other, aunts who raise nieces and nephews, and grandparents and grandchildren are all excluded from the current definition of family.
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Make periods of family and medical leave job-protected. Workers won’t take leave when they are sick or when they welcome a new child if their boss can fire them for doing so.
National severance pay law aimed at curbing the egregious practices of private equity firms, exemplified by the struggles at Toy “R” Us and Sears. If the cost of reducing payrolls is higher, private equity firms will have to reconsider strategies that rely on shedding workers or selling off assets.
Expand Social Security, make the payment up to the first bend point of the benefit formula 100 percent of adjusted earnings, so low-income people benefit from the expansion. Currently the benefit formula pays benefits equal to 90 percent of their first $10,700 in average annual earnings. Raising this to 100 percent would mean an 11 percent increase in benefits for low- and moderate-income workers.
Encourage state-run retirement plans (or create a federal version) that offers workers a low-cost way to save for retirement that avoids costly Wall Street plans.
Macroeconomy
The Federal Reserve should adopt policies along the lines of Coretta Scott King Full Employment Federal Reserve Act, which emphasizes the full employment aspect of the Fed’s dual mandate of full employment and stable prices.
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Inflation, taking out components like food, energy, and shelter that usually have different underlying dynamics than the economy at large, has been low — around or below the Fed’s 2.0 percent guideline (which is an average, not a ceiling).
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Even absent any pressure from inflation, the Fed often deliberately slows the economy by raising interest rates to respond to concerns about inflation from the financial sector and other sectors of the economy. This throws workers out of their jobs.
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The Fed should explore how low unemployment can go before inflation pressure builds up. The Fed’s estimates of the lower bounds of unemployment have been consistently wrong.
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Lower interest rates disproportionately benefit people of color and others disadvantaged in the labor market. Since 2015, there are 1.5 million more employed black workers in part because rates stayed relatively low.
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The Fed should listen to a diverse set of voices when making decisions and be comprised of people that resemble the demographics of the populations it serves.
At the state or federal level, create pilot programs around bold ideas for full employment like a federal jobs guarantee, and reduce the friction around proven ideas like work sharing.
Flip the conversation about deficits and debt by not talking about balancing spending with taxes, or “running out of money.” Instead, talk about how resources are wasted on tax cuts, Wall Street, the DOD, patent monopolies, high CEO pay, and other things that have little social or even practical benefit. When critics claim that progressive policies like free college or a Green New Deal will be “expensive,” shifting the focus from money to resources makes it more intuitive to the public that the country has the necessary resources to implement far-reaching programs.
Prescription drugs/scientific research
Release all research that is funded by the public in open-access journals, and make datasets available too. This would accelerate developments in various fields.
Allocate money (about $10 billion) for financing research and drug development, with the new drugs sold as generics. (This should start to pay off in a 10-year budget window if the money is used to buy up some promising prospective drugs and carry them through the testing process.)
Create a government-run or -sponsored drug manufacturing facility along the lines of the Warren–Schakowsky bill.
Inequality
Implement a Financial Transactions Tax, which would reallocate about $30 billion to $580 billion from the financial sector, depending on specifics (over $100 billion is a middle estimate).
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This would reduce volatility and waste in the financial sector without affecting its ability to allocate capital.
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Politically, the tax could “pay for” other programs like free college.
Make Dodd–Frank shareholder “Say on Pay” votes for CEO pay packages binding, and require that company directors sacrifice their pay in the event of a “no” vote.
Eliminate the tax-exempt status of any nonprofit that pays any top management more than a certain amount (e.g., $400,000 per year, the salary of the President of the United States). This would probably result in a revenue increase of about $15 billion a year, assuming no change in behavior.
Renew Congressional oversight of the IRS with an eye toward refocusing the agency on collecting taxes from those with the most income to hide. Provide the IRS the funding and personnel it requires to catch up to the tax avoidance and tax evasion industries.
Implement oversight designed to highlight revolving door personnel at key financial regulatory agencies (e.g., the Securities and Exchange Commission), competition agencies (e.g., the Federal Trade Commission), and Departments (e.g., Treasury) who entrench the power of some of America’s worst corporate actors. Support something along the lines of the Warren–Jayapal Anti-Corruption and Public Integrity Act.
Environment
Although this would have a modest effect on climate change, implement a $200 a year tax credit for people to buy pay-by-the-mile auto insurance, which adds a significant disincentive to driving.
Enact a Green New Deal as outlined by various progressive politicians and movements to tackle climate change.
