The Republican presidential nomination contest reached another milestone yesterday with two more major primaries, in Arizona and Michigan.

The delegate “haul” in both states was reduced by half, since they violated the RNC’s calendar rules by holding their primaries before March 1.  But since these primaries were the first events to occur after Rick Santorum’s three-state sweep on Feb. 7, and because Santorum had risen rapidly in both national and Michigan polls since then, they became something of an existential threat to the Romney campaign.  Indeed, prior to the results the air was full of panic-stricken, if largely anonymous, claims that party leaders would have to recruit a late-entry candidate if Romney failed to win in Michigan, his native state.

It turned out, of course, that Romney did win Michigan, though by a narrow 3-point margin.  He also won Arizona, and all its delegates, by an impressive 20-point margin, but that contest drew little national attention.  The tendency of the chattering classes to focus on Romney’s weak spots and defeats rather than his points-of-strength and victories remains a big problem for his candidacy going into the Super Tuesday events in ten states.

The exact extent of Romney’s Michigan win remains a bit muddled.  His camp is claiming the victory was larger than it appeared because Santorum deliberately sought mischief-making Democratic crossover votes, trying to “hijack” the primary.  According to exit polls, Santorum did indeed win by a 53-18 margin among the 9% of primary participants self-identifying as Democrats, and also uncharacteristically ran well, just a few points behind Romney, among voters calling themselves “moderates or liberals.”

Santorum is, of course, claiming his strength among Democrats and independents is proof of his superior appeal to blue-collar workers, and an example of why he is typically running ahead of Romney in general-election trial heats in “Rust Belt” states.  There’s no way to definitively resolve this argument without the administration of sodium pentathol to Michigan voters. It is worth noting that the next big “Rust Belt” test, in Ohio, is often described as a closed primary, but actually involves a system where registered indies may vote in either party’s primaries, and voters can easily change party affiliation at the polls.

One much-discussed aspect of the MI results requires a bit of explanation. There was a lot of talk on primary night that Rick Santorum had “lost” the Catholic vote in the state by expressing strong disagreement with John F. Kennedy’s famous 1960 statement on church-state relations.  An examination of earlier contests with exit polling, however, pretty clearly establishes that the Catholic vote was never Santorum’s to lose; his actual electoral base has been conservative evangelical Protestants (and more generally, voters identifying as “very conservative” or especially opposed to legalized abortion) all along.

There’s a caucus-with-straw-poll event in Washington State on Saturday, March 3, in which Santorum, Romney and Paul are all competing aggressively; a Feb. 21 PPP survey showed Santorum with a comfortable if not overwhelming lead.  That evening, we have just learned, three of the remaining candidates (Ron Paul has decided to spend the entire day campaigning in Washington State) will appear in a “forum” on Mike Huckabee’s Fox News show, which will be broadcast from Ohio.

The “Super Tuesday” events include primaries in: Ohio, of course, which could get the lion’s share of attention; Romney’s home state of Massachusetts and nearby Vermont, both of which he is expected to win easily; Virginia, where only Romney and Paul are on the ballot; Gingrich’s home state of Georgia, which along with other Dixie-flavored primaries in Tennessee and Oklahoma is where he is placing his emphasis. There will also be low-attendance caucuses in North Dakota, Idaho and Alaska, where Ron Paul is expected to concentrate his resources (in addition to Virginia).

There are two ways to look at the Super Tuesday dynamics: Romney is the only candidate with significant strength in all these contests, and will definitely come away with a plurality of delegates. But on the other hand, if he loses to Santorum in Ohio, Gingrich or Santorum in Oklahoma, Gingrich in Georgia and Tennessee, and Paul in Virginia or the caucus states, it could be perceived as a real fiasco for his candidacy.

Romney might have hoped that his rivals would tear each other apart in the continuing competition for the “non-Romney vote” of hard-core conservatives.  But aside from the likelihood of geographical specialization by these candidates, they aren’t holding their fire against Romney to go after each other.  Newt Gingrich’s Super-PAC, with a fresh infusion of money from casino mogul Sheldon Adelson, is beginning to run a new round of ads in southern states almost entirely focused on attacking Romney.  Santorum is totally focused on fighting Mitt. And even Ron Paul, who has often been accused of an implicit alliance with Romney, is beginning to include him alongside Santorum and Gingrich as targets in attack ads.

With the GOP contest still up in the air, the Obama campaign has remained upbeat and engaged (viz. the President’s fiery speech to a UAW convention yesterday). Most observers figure he is only being helped by the GOP slugfest, and that has been the clear trend in the polls, with one rather startling exception: a new Gallup-USA Today survey focused on 12 battleground states that shows Obama in trouble in most of them and actually trailing both Romney and Santorum nationally. While that may be an outlier, there’s a broader concern that sharply higher gas prices are undermining the earlier perception of an improving economy.  The next set of “jobs numbers” for February will be watched closely.

In down-ballot news of national significance, Maine Sen. Olympia Snowe surprised virtually everyone by announcing she would not, after all, seek re-election in 2012, citing her concerns about partisan polarization in Washington. This is being widely viewed as a major blow to Republican prospects for a Senate takeover in November.  But it’s also being viewed as a possible opening for a Snowe bid (or draft) for the presidency on the Americans Elect ballot line.  Yes, this election year really is turning into a big game of three-dimensional chess.

Photo credit: Dave Lawrence

In these 16 states, home prices are down an average of 16 percent since October 2008—from a median of $160,596 to a median of $131,191 in December 2011.

The states included in the PPI analysis are among those hardest-hit by the housing crisis: Nevada, New Mexico, Arizona, Virginia, Ohio, Wisconsin, Michigan, Iowa, New Hampshire, Indiana, Colorado, Florida, Missouri, North Carolina and Pennsylvania.

PPI’s analysis is based on data derived from Zillow and the U.S. Census Bureau. The overall median home value for the battleground states is a weighted average based on the proportion of housing units in that state.

For more information, see Gold and Kim’s policy report, “Underwater: Home Values in 2012 Battleground States.”

China may look like an unstoppable economic juggernaut, but it is increasingly beset at home by worker protests and strikes.  Last June, for example, security officials in Zengcheng, a manufacturing city in southern China, fired tear gas at hundreds of migrant workers who smashed windows and overturned police cars after hearing the rumor that authorities had pushed a pregnant migrant street vendor to the ground.

Spreading labor unrest in China has large economic as well as political implications for Sino-American relations. Put simply, stronger rights for Chinese workers is good for America’s bottom line. By explaining our economic interest in empowering China’s workers, U.S. leaders could galvanize broad public support behind a more insistent push for individual and civil liberties in China. Too often, however, they fail to make that connection. They may deplore the way China arbitrarily limits speech and imprisons lawyers,
human rights watchdogs, religious leaders, and worker advocates. But they rarely note that empowering China’s workers would likely lead to higher wages and benefits, and therefore a shrinking labor cost advantage over U.S. competitors.

In this paper, I explore the vital link between the rights of Chinese workers and the competitive health of the American economy. If a nation has lax labor laws, or has good ones but doesn’t enforce them, local employers can keep wages down and produce goods atmuch cheaper cost. Moreover, if workers are unable to strike or effectively petition their employers because the legal system doesn’t guarantee freedom of speech and association, then their country is essentially subsidizing its companies, giving them an unfair advantage in the global economy.

Indeed, inconsistent labor law enforcement, inattention to workplace safety, and violations of binding legal contracts (such as wage agreements) have enabled Chinese manufacturers to hold down the price of Chinese labor. The labor cost differential, of course, is the main reason Chinese goods are significantly cheaper, even after they have been shipped to the United States. Raising labor standards in China will inevitably lead to raising the price of Chinese-produced goods, making goods produced by U.S. workers more competitive. That’s why strong U.S. support for the rights of China’s workers should be an integral part of Washington’s strategy of constructive engagement with Beijing. Not only is it the right thing to do from a human rights standpoint, it is also clearly in America’s economic interests as we seek a more balanced commercial relationship
with China.

More specifically, let me offer seven recommendations for U.S. policymakers:

1. Put human and worker rights at the center of U.S. diplomacy toward China.
2. Raise public awareness of the link between workers’ rights in China, and economic benefits for Americans.
3. Work closely with other liberal democracies to demand China’s adherence to its own labor laws and international standards.
4. Expand bilateral working groups on labor rights, so that these issues come up routinely in Sino-American relations.
5. Fund civil society groups that promote and defend workers’ rights.
6. Use trade as leverage to achieve progress on workers’ rights.
7. Ratify two key International Labour Organization protocols: the Freedom of Association and Protection of the Right to Organise Convention (1948), and the Right to Organise and Collective Bargaining Convention (1949). In advocating rights and liberties around the world, the U.S. must also lead by example.

Download the full report

PPI Chief Economic Strategist Michael Mandel, explains in The Atlantic how innovative developments in the App Economy provide important lessons for the whole economy:

“Android, apps, iPhones, Angry Birds, iPads, FarmVille, data contracts: It’s a bit jarring to realize that these terms, so familiar today, only date back five years. The introduction of the iPhone in 2007, and the initial distribution of Android the same year, marked the birth of the App Economy.

“But the App Economy didn’t just mean more fun games and more ways to do work on the go — it meant more jobs as well. Based on research I did for Technet, the association of high-tech innovative companies, the App Economy has generated nearly 500,000 jobs since 2007. This is an impressive total, especially during the worst labor market downturn since the Great Depression. It’s also an indication of the growing macroeconomic impact of the App Economy.

“We can draw three lessons from the success of the App economy to help us understand how we can drive prosperity forward.”

Read the full article at The Atlantic

A February 2012 paper by PPI Chief Economic Strategist Michael Mandel estimated that the App Economy has generated almost 500,000 new jobs since 2007. Mandel wrote:

“The incredibly rapid rise of smartphones, tablets, and social media, and the applications—‘apps’—that run on them, is perhaps the biggest economic and technological phenomenon today…On an economic level, each app represents jobs—for programmers, for user interface designers, for marketers, for managers, for support staff….

…App Economy employment also includes app-related jobs at large companies such as Electronic Arts, Amazon, and AT&T, as well as app ‘infrastructure’ jobs at core firms such as Google, Apple, and Facebook. In addition, the App Economy total includes employment spillovers to the rest of the economy.”

The growth of App Economy employment is a bright spot in an otherwise sluggish labor market, showing how innovation is still the best job creator.

So how then can Washington best encourage the continued growth of the App Economy? The absolutely essential ingredient for the App Economy is spectrum. By spectrum, we are referring to the radio frequencies which carry the streams of data to our smartphones and tablets. And as apps get more and more sophisticated and indispensable, our mobile data needs grow rapidly, and we face the danger of a spectrum crunch.

That means there’s a great need for the Government, which controls spectrum licenses, to free up additional spectrum if App Economy employment – and future mobile service innovation – is to grow.  Last week, Congress authorized the Federal Communications Commission (FCC) to organize a “voluntary incentive auction” for unused, or underused, spectrum. The FCC is working with TV broadcasters to sell their unused and underused spectrum in an auction format to commercial wireless broadband providers that need more spectrum for wireless network and capacity extension. The winning bidders are likely to be mobile service providers and the current broadcast license owners will receive a share of the selling price. This auction is part of a plan by the Obama Administration to sell 500 megahertz of spectrum over the next 10 years.

However, as part of last week’s legislation, Congress also gave the FCC the authority to establish general applicability rules for the auction regarding the amount of spectrum any one company can hold. In other words, the FCC has the ability to restrict which companies can participate in the auction, if the participant owns more spectrum than the FCC deems eligible. Unfortunately, the FCC appears to be working under the assumption that only the larger mobile service providers will obtain spectrum at auction, out-bidding smaller rivals.

But at a time when the App Economy is creating jobs at a rapid pace, the FCC should not try to dictate who should or should not be allowed to buy spectrum. The key to making the voluntary auction a success is ensuring that spectrum is awarded to the companies who can get it to consumers as quickly and efficiently as possible, who have the resources now to invest in new innovations, creating jobs and boosting the economy in the process. And the economic potential of spectrum innovation is great. A recent study by Robert Shapiro and Kevin Hassett calculates that over 1.5 million jobs were created over 2007-2011 from wireless providers’ switch from 2G to 3G.

Which companies are best suited to get spectrum innovations to market quickly and effectively? A December 2011 policy brief from PPI, “Scale and Innovation in Today’s Economy,” shows that larger companies with a national reach may be the best placed to quickly move innovations through development into the hands of consumers. Larger companies have the resources readily available and the platforms needed to implement large-scale innovations to a national wireless network. What’s more, smaller carriers increasingly depend on the ability of larger companies to effectively move wireless network innovations to scale to provide their customers with better service.

It may be at least a year or more before the FCC implements the new legislation, and many more years before an auction takes place. Until then, mobile service providers will be forced to work within their existing spectrum, and hopefully will continue to find new ways to make spectrum more efficient. Indeed, mobile providers have already invested billions to increase the data-carrying capacity of existing spectrum. For example, in 2011, AT&T introduced 4G, the fourth generation of high-speed wireless communication, to its mobile services which is 50 percent more efficient than its 3G predecessor.

While such efficiency-boosting advancements are very important to the future of spectrum, and to the future of the App Economy, the only long-term solution is to get as much spectrum to market as possible, as quickly as possible. And given the clear importance of the App Economy for driving growth, making sure the FCC conducts spectrum auctions the right way – by not restricting eligible participants – is critical for creating tomorrow’s jobs and ensuring a strong economic recovery.

Photo Credit: Brian Wilkins

The GOP nomination contest has entered its most critical two-week period yet, with primaries in Michigan and Arizona on February 28; the Washington caucuses on March 3, and then the eleven-state extravaganza of Super Tuesday, March 6.

With Rick Santorum now holding a steady lead over Mitt Romney in national polls of Republicans, it is crucial for Romney that he win his native state of Michigan to regain momentum, reassure party elites, and replenish his diminished financial coffers.

Romney and his Super-PAC are reportedly outspending Santorum’s forces in Michigan by about a 3-1 margin, and are fielding a mix of positive and negative ads.  An early PPP poll showing Santorum sprinting out to a 15-point lead in Michigan now looks to be an outlier; PPP’s latest survey in the state shows Santorum only up by three points, and at least one other poll shows Romney regaining a small lead.  Everyone agrees the contest is very close, with support patterns indicating Santorum holding his customary leads among evangelicals and “very conservative” voters, and Romney doing well with “moderates” and Tea Party skeptics.  Polling of Arizona (where Romney benefits from a sizable LDS vote) is also becoming available, uniformly giving Romney a single-digit lead.  A wild-card in Arizona is that Newt Gingrich is doing relatively well there (unlike Michigan, where he’s running fourth behind Ron Paul); one theory is that his supporters could break to Santorum on primary day.

All of these dynamics make tonight’s CNN candidate debate in Arizona very important.  It could, in fact, be the last televised debate of the entire contest.  One possibility is that both panelists and the other candidates could gang up on Santorum, who’s been under attack as a “fiscal liberal” by his rivals, and as an erratic religious extremist by many news media observers.  (In a potentially significant, and certainly unprecedented development, two conservative opinion-leaders considered supportive of Romney, Matt Drudge and Washington Post blogger Jennifer Rubin, have suddenly begun attacking Santorum’s religion-based views on cultural issues).  Santorum, who’s been a relatively strong debater, could try to duplicate Gingrich’s successful tactic of turning attacks on his tormenters.  And of course Gingrich himself, not to mention Ron Paul (who’s shown recent interest in going after Santorum) will be factors as well.  It would be a particularly poor moment for any candidate to commit a gaffe.

If February 28 produces anything less than a dual Romney win in Michigan and Arizona, Super Tuesday could become dicey for Mitt (it is generally assumed Santorum is likely to win the March 3 caucuses in Washington).  He’s beginning to experience money troubles thanks to his heavy spending and his lack of an ideologically-driven small donor base.  Romney does have some Super Tuesday advantages: his home state of Massachusetts votes then, and he and Ron Paul are the only candidates on the ballot in Virginia.

The most alarming threat to Romney would be a divide-and-conquer strategy where Santorum concentrates on the biggest prize, Ohio, while Gingrich’s Super-PAC spends the fresh $10 million it has reportedly received from casino mogul, Sheldon Adelson, to focus on Georgia, Tennessee and perhaps Oklahoma.  Additionally, Paul is expected to concentrate on small-state caucuses where he could do additional damage to Romney’s delegate count.

There are also new rumblings of discontent from elite Republican circles where a Santorum (or Gingrich) nomination is considered potentially catastrophic, while Romney’s perpetual inability to win over conservative voters or show much appeal to independents is perpetually troubling. One “prominent Republican senator” informed a reporter last week that if Romney loses Michigan, he will go public with a call for a draft of Jeb Bush.  While there’s zero evidence Republican voters are interested in a late entry or a “brokered convention,” or that any particular “white knight” could avoid the pitfalls that have snared the actual candidates, it is obvious Romney would suffer from major defections of elite party support, if only among his funding sources.

All in all, it would be very prudent for Romney to win Arizona and Michigan next Tuesday.  If he loses both, the craziness will really intensify and almost anything could happen. Alas, it just keeps getting better and better for President Obama.

Photo Credit: Yahoo Politics

The Republican presidential nominating contest continues to produce endless surprises.

A week ago, the key question was whether victories in two low-turnout caucuses and a “beauty contest” primary would vault Rick Santorum past Newt Gingrich as the latest aspirant to the conservative-alternative-to-Romney mantle. Now, cascading evidence from polls suggest Santorum has become a serious threat to Romney’s status as front-runner, and is a couple more primary wins away from becoming what might be called an existential threat to Mitt’s candidacy.

National polls are now consistently showing Santorum leading, or essentially tied with, Romney among Republican voters. More alarmingly for Romney, the three latest polls taken in Michigan—whose primary will be held on February 28—show Santorum leading there, too, despite a longstanding assumption that Mitt would romp to an easy win in his native state.

While there has been no recent public polling in Arizona, which also holds its primary on February 28, the Santorum Surge has clearly spread to the Super Tuesday (March 6) states. A Quinnipiac poll, for instance, now shows him leading in that day’s biggest state, Ohio, and another survey indicates he’s threatening Newt Gingrich in his own home state of Georgia. An especially dangerous development for Romney is that Santorum is now running ahead of Mitt in at least one major general election poll, calling his longstanding “electability” advantage into question.

All the polls indicate that a key ingredient of the Santorum Surge is relatively high favorable/unfavorable ratios, reflecting his ability to escape significant questioning while Romney and Gingrich (and their super PACs) have pounded each other with negative ads. That is very likely to change, even though conservative opinion-leaders are far more protective of Santorum than of either Romney or Gingrich, and most will not join the fun the way they so often have with the other candidates.

Just today, reports have come out suggesting that Team Romney might execute a multi-state air war against Santorum, attacking him from the Right for votes in the Senate favoring No Child Left Behind and Medicare Rx Drugs. Despite the fact that both were Bush administration initiatives, supported by many Republicans at the time, these programs have now become symbols of big-spending heresy. That line of attack, however, is not all that’s on the horizon. There’s also at least one report that Gingrich’s main super PAC donor, casino mogul Sheldon Adelson, is on the brink of reopening his check book to finance attacks on Santorum, apparently in part because Adelson wouldn’t mind helping Mitt as well as Newt.

All this warlike activity on the GOP side is clearly good news to Democrats. It also comes at an opportune time, just as better economic news and a sharper Obama message has emerged to lift the incumbent’s re-election prospects notably. Obama has led Romney in eight consecutive major general election polls by at least five points. Even more significantly, according to an analysis yesterday by Ron Brownstein based on the latest Pew survey, Obama is now matching his 2008 performance very closely among nearly every key demographic category.

Obama’s stretch of good luck is also extending into individual controversies with the GOP. So far, at least, he seems to have regained an advantage in the battle with Republican politicians and the U.S. Conference of Catholic Bishops over a proposed employer insurance mandate for contraception coverage. A relatively small modification of the original mandate to require insurers rather than religiously-affiliated institutional employers won the administration praise from an array of Catholic hospital, social-services, and higher-education leaders, frustrating the efforts of the Bishops to speak for Catholic institutions in demanding a complete repeal of the mandate.

And while polling on the subject has varied significantly according to the timing and wording of surveys, it’s reasonably clear Catholic voters’ attitudes on the subject closely track public opinion generally. Meanwhile, as the controversy beings to focus less on broad claims of endangered “religious liberty” and more on attitudes towards the more specific issues of health insurance coverage, Republicans are running the risk of identifying themselves too closely with the Catholic hierarchy’s very unpopular views on contraception.

The current prominence of a presidential candidate, Rick Santorum, who has not been shy about proclaiming his own hostility to contraception, probably does not help – well, at least not the Republicans.

Photo credit: Mark Taylor

America’s long nuclear energy drought is officially over. For the first time in 33 years, the Nuclear Regulatory Commission (NRC) has approved a construction and operating license for a new nuclear reactor in the United States – actually two of them to expand Southern Company’s Plant Vogtle generating facility in Georgia.

This is good news for U.S. electricity consumers, companies, and workers. Since 1979, the last time NRC approved a construction permit, U.S. electricity use has risen more than 80 percent. An expansion of nuclear power – which has provided about 20 percent of the nation’s electricity for decades – shows that the United States is serious about meeting growing energy demand without pumping more carbon into the atmosphere. At a time when political support for some kind of carbon cap or tax has seemingly collapsed, that’s an important sign that Americans aren’t giving up on protecting the Earth’s climate.

The two reactors will generate thousands of badly needed construction and operating jobs. Their larger significance, however, may lie in symbolizing America’s commitment to rebuilding its productive base. In effect, the NRC’s action puts America back in the nuclear energy business, and not a moment too soon. Around the world, some 160 new nuclear reactors have either been ordered or are planned to be operational by 2030, according to the World Nuclear Organization. We need to rebuild our nuclear industrial infrastructure to be able to compete in the fast-growing global market for nuclear energy.

The NRC’s decision comes on the heels of another important development which bodes well for America’s “nuclear renaissance.” Last month, President Obama’s Blue Ribbon Commission on America’s Nuclear Future (BRC) issued its final report. It offers a new strategy for breaking the impasse on nuclear waste disposal, which has tied politicians in knots over the proposed Yucca Mountain facility for decades. Headed by Democrat Lee Hamilton and Republican Brent Scowcroft, the BRC calls for a resumption of the search for a second geological storage site, which it says we will need regardless of Yucca’s fate.

Nuclear energy still faces significant hurdles, especially the enormous upfront costs of siting and building a generating plant. But if the NRC can follow today’s action with a commitment to speeding up the approval process, some of those costs could be mitigated. In any case, it’s critical for the United States to recapture its technological leadership in energy, which includes the civilian nuclear power industry that was first invented here.

Photo Credit: Blatant World