A Case for Making TTIP Better for Workers

In today’s Cato Online Forum essay, George Washington University Professor of Foreign Affairs Susan Ariel Aaronson argues that the “TTIP provides an opportunity to think differently about how policymakers in advanced industrialized economies can protect labor rights, encourage job creation, and empower workers.”  After describing some of the concerns workers have about the TTIP and explaining why certain parts of the agreement could serve to undermine labor rights, Susan provides some fresh recommendations for making the TTIP more appealing to workers.

Read it. Provide feedback.  And register for Cato’s October 12 TTIP conference.


Postal Privatization Gaining Broad Support

Brookings scholar Elaine Kamarck has a new study favoring partial privatization of the U.S. Postal Service (USPS). Her study comes on the heels of a solid study by Clinton administration economist Robert Shapiro, who looked at the subsidies and regulatory protections enjoyed by the USPS.

Conservative and libertarian scholars have discussed the advantages of USPS privatization for years. Britain, Germany, the Netherlands, and other countries have privatized their systems. But the mainstream media and leaders in Congress have taken little notice. Kamarck’s study generated a respectful news story in the Washington Post, so hopefully the addition of centrist scholars to the debate will generate momentum for reform.

Kamarck discusses the rise of the Internet, the plunge in snail mail volume, and the postal system’s endemic red ink. She discusses the increasing concerns about the USPS competing against private firms in areas such as package delivery.

Kamarck advocates splitting the USPS into two pieces: a government piece that fulfills the “universal service” mandate for delivering mail to every address, and a private piece that would handle activities that compete with other companies.

The Sentencing Reform and Corrections Act Is a Compromise, but a Pretty Good One

Last week a bipartisan group of senators, led by conservative Senate Judiciary Chairman Chuck Grassley (R-IA), announced the Sentencing Reform and Corrections Act of 2015.

The bill clearly represents a compromise between criminal justice reformers and more conservative law-and-order legislators, but the aggregate effect on the criminal justice system would be a substantial improvement.

On the positive side, the bill reduces several mandatory minimums relating to non-violent drug and firearm offenses (notably reducing the “three strikes” life sentence to 25 years), adds several safety valves to allow judges to adjust the penalties for certain non-violent offenses, and in many cases works retroactively to lower the excessive sentences of those already convicted of the relevant crimes.  Further, the bill would require the federal government to compile and publish a database of all federal crimes, their elements, and their potential penalties.  In addition, the bill would restrict the use of solitary confinement on juvenile offenders, create a new system for assessing the risk level of federal prisoners, among several other corrections changes.

On the other hand, the bill creates brand new federal mandatory minimum sentences for interstate domestic violence crimes that result in death and for providing prohibited support to terrorist organizations. It’s unclear why legislators feel that terrorism suspects are treated too leniently by the current sentencing structure, and taking discretion away from judges to impose sentences based on the particular facts of the cases before them is a step back.  Also on the negative side, the bill increases the mandatory minimum for felons caught in possession of a firearm from 10 to 15 years.  There are nearly 6 million convicted felons in the United States, a great many of them having been convicted of non-violent drug offenses. Once again, it is unclear why legislators, rather than judges and juries, should determine the proper punishment for a felon who is caught with a firearm, or why the current 10 year mandatory prison sentence is considered insufficient.

Analyzing Arne’s Era and What’s to Come

Arne Duncan announced Friday that he is resigning as Secretary of Education, effective sometime in December. He will be replaced – sort of – by Deputy Education Secretary John King, who will not be put up for the permanent job but will be kept until the end of the administration in an “acting” – and Senate confirmation-less – capacity.

Of course, what Duncan has done as Secretary reflects what the Obama administration wanted, not what Duncan did on his own. Regardless who was ultimately calling the shots, though, Duncan presided over a period that has fulfilled some of the worst fears of anyone who has ever said, “It might be a bad idea to have a federal education department. They might start trying to run things.”

The overarching theme under Duncan has been huge consolidation of power not just at the federal level – alone blatantly unconstitutional – but in the Department itself.

A Skeptical View of the Need for Special Investor Protections in the TTIP

The Transatlantic Trade and Investment Partnership has generated quite a lot of opposition – or at least pockets of very loud opposition – especially in Europe. Among the major points of contention is the matter of investment protection and, specifically, the investor-state dispute settlement mechanism, which gives foreign investors the option to bypass the domestic legal regimes of host governments and go straight to third party arbitration panels with claims concerning domestic policies, laws, regulations, or actions that have a discrimintory effect and adversely affect the value of their investments.

Like my colleague Simon Lester and I, Axel Berger of the German Development Institute is skeptical of the need and propriety of ISDS provisions.  In today’s Cato Online Forum essay, Axel raises some important points and makes a good case for excluding ISDS provisions from the TTIP.  Read it. Provide feedback.  And register for Cato’s October 12 TTIP conference.

Trans-Pacific Partnership Deal Reached! Now What?

After six years of negotiations, a final Trans-Pacific Partnership agreement has been reached in Atlanta.  Check your pacemakers, trade policy wonks. This is about as exciting as it gets in our world.

First, congratulations are in order for the TPP negotiators, who worked extremely hard over the past several years in an environment of profound public skepticism – much of it driven by pervasive scaremongering – to arrive at this moment. Reaching accord on a broad array of subjects between 12 countries at different levels of economic development with disparate policy objectives is not a task for the faint of heart.

Second, there is still quite a bit of work to be done on the domestic front. Even with the deal “concluded,” the president cannot sign the agreement until 90 days after he officially announces his intention to do so.  During that period, there will be intensive consultations between the administration and Congress over the details; the legal text of the agreement will be made available to the public on the internet; the USTR advisory committees will submit their assessments of the deal to Congress; and there will be ample opportunity for informed, robust domestic debate about the deal’s pros and cons.

After the 90-day consultation period, the president can return to the TPP partners with input from Congress, which may or may not warrant modifications to the deal to improve its chances of ratification. Once the deal is signed, the administration then has a maximum of 60 days to prepare a list of all U.S. laws that will need to be changed on account of TPP; the U.S. International Trade Commission will have a maximum of 105 days to do an analysis of the likely impact of the TPP on the U.S. economy; the congressional trade committees will perform mock markups of the implementing legislation; and, then, the final TPP implementing legislation will be introduced in both chambers.  After the legislation is introduced, the House will have 60 days and the Senate will have 30 days to hold votes.

These requirements stem from the Trade Promotion Authority legislation enacted over the summer. If the TPP is going to be ratified by this Congress under this president, the timelines suggest that there isn’t much room for delay. Although it has become an article of faith that trade bills don’t move during election years, there is simply no avoiding the TPP landing in Congress’s lap and animating the presidential debates and primary elections. Expect a vote anytime after July 2016, including, possibly, during the lame duck. (And watch to see whether and how Hillary Clinton contorts her position to come back around to supporting the deal she helped launch as Sectretary of State.)

As to substance, I’m not offering any endorsements until I have a chance to review the text.  In fact, my trade center colleagues and I intend to do a chapter-by-chapter assessment of the deal, rating each on a scale of 0 (protectionist) to 10 (free trade), and providing an aggregate TPP grade.  We expect the scores for some chapters will be pulled down by certain terms that amount to baked-in protectionism.  For example, apparently the United States “secured” a 25 year phase-out period for our 2.5% auto import tariffs and a 30 year phase-out for our 25% pick-up truck tariff.  Gee, thanks for that shot glass of economic freedom.

Like most legislation that comes before Congress, there will be both good and bad terms in the TPP.  If the agreement is net liberalizing, I will likely offer my endorsement.  And, as I like to say about these trade deals, don’t make the perfect the enemy of the good.

Federal Government Pay Exceeds Most Industries

New data show that worker compensation is rising faster in the federal government than in the private sector. After rapid growth in federal pay during the George W. Bush years, growth slowed from 2011 to 2013 after policymakers enacted a partial freeze on federal wages.

That era of restraint is now over. The latest data from the Bureau of Economic Analysis (BEA) show that wages rose 2.9 percent in the federal government in 2014, on average, compared to 1.7 percent in the private sector. When benefits such as pensions and health care are included, federal compensation increased 2.8 percent, on average, compared to 1.3 percent in the private sector.

Federal civilian workers had an average wage of $84,153 in 2014, compared to an average in the private sector of $56,350. The federal advantage in overall compensation (wages plus benefits) is even greater. Federal compensation averaged $119,934 in 2014, which was 78 percent higher than the private-sector average of $67,246. This essay discusses trends in federal and private pay.

The BEA provides compensation data by industry. The figure shows average compensation in 17 major private industry groups, as well as compensation for federal civilian workers, the military, state and local governments, and federal government enterprises (mainly the postal service).

The federal government has the fourth highest paid workers in the United States, after utilities, mining, and the management of companies. Federal compensation is higher, on average, than compensation in the information, finance and insurance, and professional and scientific industries. Federal compensation is more than twice as high as compensation in the education industry, and it is more than three times higher than compensation in the retail trade industry.

For more information, see here.