PSN 2011 Tax and Budget Roundup: Middle Class Reels From Extreme Cuts, Damaging Right-Wing Fiscal Priorities

In this week’s Research Roundup, reports from U.S. PIRG on best practices in public-private partnerships, the Economic Policy Institute on major federal budget proposals being considered, the Fiscal Policy Institute on economic trends in New York state, and the Ewing Marion Kauffman Foundation on how new policies encouraging new startups, including allowing more foreign entrepreneurs to immigrate to the United States, could help lower unemployment and increase economic growth.

High-Speed Rail: Public Private or Both? Assessing the Prospects, Promise and Pitfalls of Public-Private Partnerships — In this report, U.S. PIRG assesses the experience with public-private partnerships (PPPs) in other nations and makes ten recommendations to best protect American taxpayers and serve the public. The authors find that although PPPs can have several benefits, including tapping expertise and technology, there are additionally considerable risks associated with these types of project, such as higher costs for capital, heightened risks for the public, hefty legal costs, loss of public control, and potential delays. The authors note, “The many problems and pitfalls with PPPs around the globe teach us that there are certain public interest protections that should never be negotiated away, and that the public sector must be an aggressive and capable defender of the interests of citizens in any PPP negotiation. As the nation prepares to make a massive investment in our future in the form of high-speed rail, it is important that government officials recognize that public private partnerships are not panaceas, but are merely useful tools that should only be pursued under the right conditions and with the proper protections for the public interest.”

Major budget proposals pit public investments against vital services — Economic Policy Institute (EPI) analyzes major federal budget proposals from the Obama administration, the Debt Commission, and the U.S. House of Representatives, and discovers that each would make significant cuts to public investments. EPI concludes: “Public investment — one of the budget spending categories most important to long-run economic growth and global competitiveness — constitutes over half of the NSD budget. These budget scenarios propose cutting anywhere from 37% to 58% from the NSD budget as a share of GDP. Each one would make it practically impossible (and in the Ryan plan’s case, mathematically impossible) to raise public investment up to the level required to narrow our massive investment shortfall. The numbers in these plans may add up, but to what? Crumbling roads and bridges, a second-class education system, a dirty and hazardous environment, lax consumer protections, and a government that can’t function.

Governor Cuomo’s Fiscal Policies: How Will New York’s Economy be Affected? — In this policy brief, the Fiscal Policy Institute (FPI) assesses economic trends in New York in recent years, and the potential impact Gov. Andrew Cuomo’s largely conservative and regressive fiscal priorities may have on future growth. FPI finds that although the state has fared much better economically than its neighbors and other parts of the country, certain policies, including a property tax cap, may have a detrimental economic impact. They find, “The record of the last
several years should disabuse policymakers and the media of the notion that New York's fiscal
policies are somehow causing it to do worse than the rest of the nation since it has, in fact, been doing better than the rest of the nation. Hopefully, the private sector recovery will not be undercut by the reductions in jobs in the public and non-profit sectors that are likely to result from the implementation of Governor Cuomo's fiscal policies.”

The Startup Act: A Proposal For New Legislation Aimed at Jump-Starting the U.S. Economy Through Successful Startups — This just-released policy proposal from the Ewing Marion Kauffman Foundation emphasizes that — along with other policy initiatives intended to spur growth and job creation through new startups — allowing more foreign entrepreneurs to immigrate to the United States could help lower unemployment and increase economic growth. It notes that “welcoming immigrants capable of building high-growth companies to the United States by providing ‘Entrepreneurs’ visas’ and green cards for those with degrees in science, technology, engineering and math” could be critical to jump-starting the economy.

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