January 17, 2017 The Honorable Mitch McConnell Majority Leader United States Senate Washington, DC 20510 Dear Mr. Leader: As the 115th Congress begins, we write to underscore the need for additional legislation early in this session to address the economic and fiscal crisis in Puerto Rico. The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) provided Puerto Rico with important fiscal oversight and debt restructuring tools, and now the Oversight Board and Puerto Rico’s new Governor must take the critical next steps required by this federal legislation. Working with the new Governor, the Oversight Board now must certify a Fiscal Plan and set a path to comprehensively restructure the debt before the expiration of PROMESA’s automatic stay. Treasury has continued to provide both the Oversight Board and the new Governor with technical assistance as requested, and will remain able to do so after the transition to the next Administration. Despite the important progress achieved to date with bipartisan support, the work is not done. As Puerto Rico moves forward on these next steps, Congress must enact measures recommended by both Republicans and Democrats that fix Puerto Rico’s inequitable health care financing structure and promote sustained economic growth. Without congressional action to address these issues, Puerto Rico’s return to growth and opportunity will be a significant challenge. Most urgently, Congress should address Puerto Rico’s “Medicaid cliff” funding issue before April as recommended last month by the Congressional Task Force on Economic Growth in Puerto Rico. Failure to do so would jeopardize health care for up to 900,000 poor U.S. citizens living in Puerto Rico. CONGRESSIONAL TASK FORCE REPORT On December 20, the Congressional Task Force on Economic Growth in Puerto Rico, established by PROMESA, released its Final Report. The bipartisan report provides an overview of the economic challenges facing Puerto Rico and a series of potential solutions that, if crafted well and enacted quickly, are necessary for a sustainable economic recovery. It is important that Congress not only turn ideas into action, but in doing so, address Puerto Rico’s significant remaining economic and social challenges in meaningful ways to help put Puerto Rico on a path of sustained economic growth. As the report acknowledges, Puerto Rico faces an imminent shortfall in health care funding that could leave up to 900,000 Americans without coverage if Congress does not act in the near future. Puerto Rico’s already vulnerable health care system is stretched further by a Zika outbreak that, as of January 4, has resulted in over 34,000 cases, and will affect numerous women, children, and families for years to come. It is time to provide a long-term solution to Puerto Rico’s historically inadequate federal Medicaid financing, which threatens the viability of Puerto Rico’s Medicaid program and worsens Puerto Rico’s fiscal crisis. If Congress fails to craft a long-term solution, immediate action is still needed to ensure full fiscal year 2018 financing to avoid the “Medicaid cliff” identified in the report. Without action before April, Puerto Rico’s ability to execute contracts for Fiscal Year 2018 with its managed care organizations will be threatened, thereby putting at risk beginning July 1, 2017 the health care of up to 900,000 poor U.S. citizens living in Puerto Rico. Additionally, Puerto Rico continues to suffer from double digit unemployment and a labor force participation rate that is only two-thirds that of the U.S. average. A federally-financed, locally-administered Earned Income Tax Credit (EITC) in Puerto Rico would create incentives for work and increase participation in the formal economy – just as it has done for decades in the 50 states and the District of Columbia. Instead of recommending the immediate enactment of an EITC, the Task Force only suggested Congress further explore the proposal. We strongly encourage Congress to enact this powerful economic driver to bolster Puerto Rico’s future. Our analysis of the situation over the last several years demonstrates that an EITC would be the most effective and powerful tool to address these structural challenges to economic growth. Beyond those two major issues, the Task Force recommended a number of other policies that we agree should be enacted. First, we appreciate the bipartisan recommendation for Congress to continue authorizing Treasury to provide technical assistance to Puerto Rico. Furthermore, while we recommend a different approach to expand the Child Tax Credit to more Puerto Rican families, one that is locally administered, we welcome the Task Force recommendation for Congress to expand the Child Tax Credit in Puerto Rico, to the extent it is well-designed and supplements an EITC program for Puerto Rico. We support the Task Force’s acknowledgment of the importance of data in benchmarking economic growth and fiscal developments in Puerto Rico and the recommendations to improve data quality and timeliness. Finally, we are pleased with the recommendations on small business incentives, and the need to include Puerto Rico in funding and training programs that address Puerto Rico’s differential treatment in some Federal programs. It is time for Congress to move quickly to put these recommendations into law. Last summer, Republicans and Democrats in Congress took decisive action in PROMESA to help improve Puerto Rico’s fiscal position by establishing an independent oversight board and providing it with comprehensive debt restructuring tools. As you know, these tools were provided to Puerto Rico as an alternative to a federal bailout and provide Puerto Rico’s government and the Oversight Board with comprehensive authorities to address the debt crisis. Members of Congress now must work together quickly to enact well-crafted legislation to encourage growth and opportunity for our fellow citizens in Puerto Rico. The Treasury Department and the Department of Health and Human Services stand committed to working with you to achieving those goals throughout the remainder of the transition to the next Administration. Sincerely, Jacob J. Lew Sylvia M. Burwell Secretary Secretary Department of the Treasury Department of Health and Human Services Identical letter sent to: The Honorable Charles E. Schumer The Honorable Paul D. Ryan The Honorable Nancy Pelosi
Today, Treasury released the 2016 US Financial Report, which can be found here: https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/fr_index.htm Please see the Secretary's letter below: January 12, 2017 A Message from the Secretary The annual Financial Report of the U.S. Government provides to the public a comprehensive overview of the Government’s current financial position, as well as critical insight into our long term fiscal outlook. The Fiscal Year 2016 Financial Report, the final U.S. Financial Report of the Obama Administration, reflects an economy that has come a long way since 2008, with sustained private sector job growth and increasing vitality. Under President Obama’s leadership, there has been substantial economic and fiscal progress, showing what is possible when strategic investment is paired with smart reforms. Labor market conditions continue to improve, we have added millions of jobs to the economy and GDP has grown steadily. Globally, the United States remains a driver of steady economic growth. In Fiscal Year 2016, the Nation’s economic gains contributed to increased revenues and sustainable deficit financing for the next decade. The Government’s estimated long-term fiscal gap continues to be reduced by the provisions of the Affordable Care Act of 2010, Budget Control Act of 2011, and the American Taxpayer Relief Act of 2013. These and other measures support our economy, allow our government to operate more efficiently, and support long term fiscal health. This Administration’s policies have created the space to address our country’s long term fiscal challenges; however, near term policies that reduce revenues or increase spending, such as through changes to our tax code or the Affordable Care Act, could increase the size of the fiscal gap and force more dramatic adjustments in later years. We must ensure that our prosperity is shared by all Americans, not just those at the top. I am proud of the work we have done as a country over the past eight years to address our economic challenges and am pleased to share this strong report. Jacob J. Lew Margaret Mulkerrin is the Press Assistant at the U.S. Department of Treasury.
For more than 200 years, Treasury has been managing the resources of the Federal government and embracing advancements and cutting-edge practices. Today we have an opportunity to create a more data-driven government that empowers our leaders to make more strategic decisions and provide the public with greater access and insight on how taxpayer money is spent. The ongoing Digital Accountability and Transparency Act (DATA Act) implementation, in which Treasury is playing a leading role, is providing that opportunity as agencies work to meet new standards that could enable the use of data and analytics. In 1990, the Chief Financial Officers Act of 1990 (CFO Act) established a vision for federal financial management to “provide for the production of complete, reliable, timely, and consistent financial information for use by the executive branch of the Government and the Congress in the financing, management, and evaluation of Federal programs.” Significant achievements have been made to maintain and report high-quality financial data — but the full vision of the CFO Act is still a work in progress. The 24 CFO Act agencies have been successful at promoting new accounting and reporting standards, generating auditable financial statements, strengthening internal controls, improving financial management systems and enhancing performance information. However, there is room for growth in the way financial reporting adapts to the evolving information technology landscape. Through the DATA Act implementation process Treasury has developed a DATA Act Information Model Schema (DAIMS) that links the financial data produced by agency CFOs with other spending data on Federal awards — including grants, loans and procurement data (as well as other related attributes). This new data set includes more than 400 data elements and significantly expands the data available to agency CFOs and other agency leadership. The DAIMS can also be extended to link to other administrative and program data to support data-driven decision-making. A New Vision for Federal Financial Management Treasury’s vision for a 21st century Federal Finance Organization includes five key levels based on leading private sector benchmarks for finance organizations. The first level covers the basics for any finance organization — budget formulation and transaction processing. The second level includes fundamental financial policies and regulatory controls to ensure appropriate accountability. Most agencies have achieved levels one and two. Levels three and above are where agencies can begin to see the added value in the investment of high-quality data and internal controls. This data can now be managed and used to support decision-making and to improve operations and outcomes. In addition to leading the government-wide implementation of the DATA Act, Treasury is also required to implement the law as an individual agency. As an implementing agency, Treasury is taking a data management and service delivery perspective, satisfying both internal and external customers who are demanding dynamic visualizations of data, meaningful reports and management dashboards. The DATA Act provides a unique opportunity to provide authoritative and standardized data across the enterprise to meet various needs, which fits into the new vision for Federal Financial Management above. At Treasury, we are expanding our data analytics and reporting efforts to gain more value from our data. The Department has been working internally to link existing enterprise data management activities to a financial data governance program working across the C suite and internal organizations. Treasury is also envisioning a new financial data service portal that will serve as the central repository for all Treasury financial data where agency leadership will have access to data, tools and resources to conduct program research and visualize the data in new ways, starting with DATA Act related insights. This data infrastructure will allow us to provide greater transparency and also create a more modern 21st century Federal Finance Organization that is a better steward of public resources. We believe that better data leads to better decisions and ultimately a better government. Christina Ho is the Deputy Assistant Secretary for Accounting Policy and Financial Transparency and Dorrice Roth is the Deputy Chief Financial Officer at the Department of the Treasury.
Treasury Secretary Lew's Exit Memo: Eight Years of Progress at Treasury and a Look to the Future of American Financial Prosperity
WASHINGTON –U.S. Treasury Secretary Jacob J. Lew has authored a departure memorandum that recounts the progress and work of the U.S. Department of the Treasury over the last eight years. The memo then outlines Secretary Lew’s visions and goals for the future of the Treasury Department. The Secretary closes his departure memorandum with personal reflections on the importance of bipartisan cooperation, his optimism about America’s future, and his hope that future policymakers will take careful stock of the successes of this Administration as they consider the next steps forward. Please see the memo attached. Treasury Exit Memo.pdf The full text of the memo is below: Department of the Treasury Exit Memo Secretary Jacob J. Lew Cabinet Exit Memo │January 5, 2017 Introduction The Department of the Treasury (Treasury) is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States. This role encompasses a broad range of activities, such as advising the President on economic and financial issues, encouraging sustainable economic growth, and fostering improved governance in financial institutions. Treasury’s mission was challenged like few times before in our nation’s history during the 2008 financial crisis. As few of us can forget, signs of trouble first emerged in the housing market, which set off a cascade of shocks in 2007 and 2008, including the collapse of Bear Stearns and Lehman Brothers, the freezing of credit markets, and the loss of trillions of dollars of wealth held by Americans in their homes, other assets, and businesses. By the time President Obama took office, the United States was in the midst of the worst recession since the Great Depression. The economy was shrinking at its fastest rate in 50 years and shedding more than 800,000 private-sector jobs per month. Unemployment peaked at 10 percent in 2009, a level not seen in over 25 years. The auto industry, an embodiment of American ingenuity and economic strength, was teetering on the edge of collapse; the deficit had hit a post-World War II high; and homes in neighborhoods across the United States faced foreclosure. Though the financial crisis was perhaps the most pressing challenge the country faced in 2008, it was far from the only one. Health care spending was on an unsustainable path, and millions of Americans lived in fear of facing a significant medical problem without insurance. Middle-class and working family incomes had stagnated for much of the previous three decades. Wealth disparities had grown to levels not seen since the 1920s. And after two major wars in the Middle East and strained relationships in many parts of the world, the standing of the United States around the world was in need of significant repair. We have come a long way as a country since 2008. In the following pages, I will recount the Administration’s record of progress, with a specific focus on the role Treasury has played. I will also articulate a vision for the future, and recommend steps to be taken in the coming years to make progress towards that vision. Finally, I will end with some personal reflections. Eight Years of Progress Economic Recovery Over the eight years since President Obama took office amidst the worst financial crisis of our lifetimes, we have seen a sustained economic recovery and a significant decline in the federal budget deficit. We have cut the unemployment rate in half. Our economy is more than 10 percent larger than its pre-recession peak. U.S. businesses have added a total of 15.6 million jobs since private-sector job growth turned positive in early 2010. Household incomes are rising, with 2015 seeing the fastest one-year growth since the Census Bureau began reporting on household income in 1967. And our financial system is more stable, safe, and resilient, providing the critical underpinnings for broad-based, inclusive, long-term growth. There are many factors that explain why the United States was able to bounce back so strongly from the recession. First and foremost, I credit the resilience of the American people. In addition, our policy response to the crisis was immediate and robust. Led by my predecessor, Treasury Secretary Tim Geithner, policymakers put in place a wide-ranging strategy to restore economic growth, unlock credit, and return private capital to the financial system, thereby providing broad and vital support to the economy. In February 2009, just 28 days after taking office, President Obama signed the American Recovery and Reinvestment Act, which provided powerful fiscal stimulus that resulted in a less severe recession and stronger recovery than we otherwise would have seen. Investments made through our Troubled Asset Relief Program (TARP) provided stability to our financial system, and the Automotive Industry Financing Program helped prevent the collapse of the U.S. auto industry. TARP also included housing initiatives that helped millions of struggling homeowners avoid foreclosure and lower their monthly payments. These efforts bolstered the housing market and strengthened consumer finances more broadly. And funds expended under TARP have been repaid in full, at a profit to taxpayers: in total, TARP invested $412 billion in financial institutions, large and small, during the financial crisis, and as of October 2016, these investments have returned $442 billion total cash back to taxpayers. Critically, we also acted quickly to reform our financial system, working with Congress to enact the most far-reaching and comprehensive set of financial reforms since the Great Depression: the Dodd-Frank Wall Street Reform and Consumer Protection Act. Wall Street Reform transformed the way the financial system operates, and Treasury and the financial regulators have continued to work together since its passage to implement important reforms such as the Volcker Rule, risk retention, and resolution planning for large, complex financial institutions. Because of these efforts, our system today is more stable, more transparent, and more consumer-focused. Wall Street Reform also created the Financial Stability Oversight Council, a body that looks across the entire financial system to identify future threats to financial stability, and the Consumer Financial Protection Bureau, a watchdog agency that is working hard to protect Americans from unfair, deceptive, or abusive financial practices. The progress we have made on implementing reform has resulted in a safer, stronger, and more stable American financial system—one better positioned to support growth rather than work against it, more likely for consumers to get fair treatment in their interactions with financial institutions, and less prone to major failures of financial firms that can harm Americans on Main Street. This progress must be sustained through continued follow-through, to avoid allowing a return to the recklessness and abuse that predated the worst global financial crisis of the last 80 years. A More Inclusive Economy Beyond working to bring our economy back from the brink and to spur growth, we also undertook efforts to ensure that more citizens have a fair shot at sharing in our nation’s prosperity. One of the Administration’s most significant achievements was the 2010 passage of the Affordable Care Act (ACA), which extended health insurance to millions of Americans who had not previously had it, allowed young adults to stay on the health plans of their parents, barred insurance companies from denying coverage to people with preexisting conditions, and strengthened Medicare’s solvency. Once the legislation was signed into law, Treasury implemented the law’s many new tax provisions. Beyond the ACA, the Administration made a number of other key changes to the tax code that has made our tax system significantly fairer and more equitable. Through programs like the Community Development Financial Institution Fund and myRA, and through extensive stakeholder engagement, Treasury has worked to promote access to the financial system for underserved and vulnerable populations. We also successfully worked with Congress to pass bipartisan legislation to enable Puerto Rico to undergo a financial restructuring. With continued commitment from policymakers in both the Commonwealth and the United States, this legislation will begin to put Puerto Rico on a fiscally sustainable path so that the 3.5 million Americans living there are not denied essential services and economic opportunity. Leading in the Global Economy As we put into place the financial regulatory framework to prevent future crises in the United States, we also led the international response to the crisis. We worked through the G-20 to help mobilize $5 trillion in fiscal stimulus, expand the resources of the international financial institutions by $1 trillion, and establish new institutions like the Financial Stability Board to prevent future crises. Our approach elevated the G-20 as the premier platform for international economic cooperation and put in place a demonstrated mechanism for international response. Following the financial crisis, many countries turned to policies of fiscal austerity, and Treasury vigorously advocated for a more balanced use of policy levers. Over the next several years, Treasury engaged closely with our partners and through the G-20 and other multilateral bodies to emphasize the need for short-term growth and longer-term structural reforms to put the global economy on stronger footing. Through our sustained engagement, we achieved a number of commitments from the G-20, including moving away from austerity-only fiscal policy and avoiding competitive currency devaluation. We have used the G-20 to advance a global growth agenda, and the U.S.-China Strategic & Economic Dialogue to foster increased bilateral economic coordination and engagement with China. Our sustained engagement with China has allowed us to exert positive pressure on Chinese exchange rate policy—whereas China once intervened in foreign exchange markets to drive down the value of its currency, in the past year, we have seen China intervene to prevent a rapid depreciation in the renminbi, which would have had negative consequences for the Chinese and global economies. Treasury also worked to solidify U.S. leadership by modernizing the international economic architecture to ensure that it would remain relevant in a changing world. In particular, securing the passage of International Monetary Fund (IMF) quota reform sustained U.S. leadership on the global stage. Our leadership in the IMF in turn enabled us to work through it to promote policies that supported U.S. economic and security objectives, such as economic stability in Ukraine and Greece. Promoting a Safer World Treasury has also continued to use its unique financial capabilities to address a variety of national security and foreign policy threats posed by terrorists, criminals and other bad actors. To address the changing threat posed by terrorism, including the threat posed by ISIL, we have worked with our international partners to deny terrorist financiers, fundraisers, and facilitators access to the international financial system with financial measures and targeted actions. Treasury’s sanctions against Iran played a critical role in forcing Iran to the table to negotiate a deal that cuts off the country’s pathways to a nuclear weapon. To hold Russia accountable for its aggression in eastern Ukraine and its occupation and attempted annexation of Crimea, we imposed sanctions that led to tighter financial conditions, weaker confidence, and lower investment in Russia. We also secured new domestic and multilateral sanctions measures against North Korea in the face of Pyongyang’s continued provocative behavior with regard to nuclear weapons and weapons of mass destruction. All the while, we have worked to craft a cohesive vision for the use of sanctions, in which sanctions are informed by financial intelligence, strategically designed, and implemented with our public and private partners to focus pressure on bad actors and create clear incentives to end malign behavior, while limiting collateral impact. In the face of emerging cyber threats, we have also made significant progress in coordinating cybersecurity efforts among financial regulators and the private sector, both domestically and internationally, to improve the financial sector’s resilience and to establish best practices for industry and government. A Vision for the Future Looking across the next five years, 10 years, and beyond, I see four major goals that mirror the progress above. Treasury should focus on: (i) continuing to promote more inclusive growth; (ii) moving from recovery to long-term fiscal health, (iii) remaining a leader in the global economy; and (iv) adjusting to the new threats in our world. Each of these goals brings with it major challenges that we must collectively overcome in order to reach them. Continuing to Promote Inclusive Growth Through the work of this Administration, the U.S. economy is growing again. But working families have not shared fully in the benefits of economic growth over the past decade, and there is evidence that our society has undergone structural changes that have fundamentally altered the basic social compact. It is crucial that the next Administration builds on the work already done to ensure that our prosperity is broadly shared. There are many aspects to inclusive growth, including: investing in infrastructure to create good middle-class jobs and lay the foundation for future growth, giving workers a stronger voice, enacting progressive tax policies, making quality education more available and affordable, and investing in retraining programs for those who have lost their jobs. One component most directly within Treasury’s purview is increasing access to the financial system; currently, many low-income and minority families are effectively locked out, operating without a credit card or banking history. Finding creative ways to increase access to the financial system—such as fostering new technologies—will help individuals and families transfer money and make payments safely and affordably. Financial inclusion allows people to manage life’s unexpected financial shocks, build long-term financial security, and take advantage of economic opportunities, like starting a business. Our inclusive growth agenda should not, however, be limited to domestic issues: more than 2.6 billion people live in poverty around the world, and more than two billion people rely solely on cash transactions. Moving underserved populations from a cash economy to formal banking not only increases their economic opportunity but also strengthens our ability to combat illicit and dangerous finance. Moving from Recovery to Long Term Fiscal Health The actions of this Administration, and the economic recovery those actions helped support, have sharply reduced deficits since 2009. However, both the Administration and the Congressional Budget Office project that, absent any changes in policy, the deficit will rise steadily over the next decade and beyond. Thus, while the actions of this Administration have put the country on a solid fiscal footing today, we must also focus on the long-term fiscal health of our nation. In recent years, the Administration has proposed a combination of smart investments and policy reforms that would keep the deficit under three percent of GDP for the next 10 years and nearly eliminate the fiscal gap over the next 25 years. Tax reform to curb inefficient tax breaks for the wealthy, close loopholes, and reform the taxation of capital income and financial institutions would make the tax system fairer and lower the deficit. Comprehensive immigration reform would boost labor force participation, productivity, and ultimately growth, directly addressing key fiscal challenges. Continued focus on health policy to further improve health care quality and control cost growth remains critical. This policy vision shows that investments in growth and opportunity are fully compatible with putting the nation’s finances on a strong and sustainable path. It also shows that responsible deficit reduction can be achieved without endangering vital support to poor Americans or undermining commitments to seniors and workers. Under President Obama’s leadership, there has been substantial economic and fiscal progress, showing what is possible when strategic investment to grow the economy is paired with smart reforms that address the true drivers of long-term fiscal challenges. While there is some scope for additional borrowing to finance smart investments in the next few years, ever-increasing borrowing is not sustainable as a long-run strategy, particularly when used to finance spending that does not generate higher growth or improvements for the middle class and in the case of deficit-increasing tax cuts, which deepen income and wealth disparities that are already a serious concern. Instead, the long-term fiscal health of the nation depends on smart investments in the middle class, tax reforms that close loopholes for the wealthy and ensure that everyone plays by the same set of rules, comprehensive immigration reform, and health reforms that build on our progress to date without sacrificing coverage or quality. Remaining a Leader in the Global Economy The United States must continue its long history of international economic leadership. Such leadership benefits American workers and families and enables the United States to project its values abroad to achieve its larger foreign policy objectives. Of course, the world has changed since the creation of our international financial architecture after World War II, and we must change with it. Perhaps somewhat counterintuitively, our influence internationally will increase if we share the benefits, as well as the responsibilities, of managing the global economic and financial system with emerging economies, such as China. Our influence, however, cannot be sustained if we either back away or insist on protecting the status quo. But we face a host of challenges. Our relationship with China is one of the most important in the world. While we have made much progress over the past eight years, the degree to which China is willing to takes the steps necessary to follow through on commitments to reorient its economy toward more sustainable growth, open up to foreign businesses, and be a partner in global governance, remains to be seen. As we saw from the example of Chinese exchange rate policy, engagement between the United States and China is an important means of maintaining pressure for China to implement policies that are necessary for China’s own medium and long-term economic health and to create a level playing field for the world economy. The UK’s decision to leave the European Union sent shockwaves through Europe and the world, and we must closely monitor the situation and continue to argue for the benefits of continued integration post-Brexit. Japan’s economy faces the ongoing challenges of an aging population and high public debt hampering the government’s ability to foster growth. We must also keep a watchful eye on emerging economies and the unique challenges they face. In particular, in recent years, we have made progress in our relations with Latin America, particularly with Mexico and Argentina, and we should build on that progress. Adjusting to the New Threats in Our World With the rise of state-sponsored and lone wolf terrorism, rogue nations, and international strongmen, we must address the reality that we live in a dangerous world. Making it safer means using every tool available—including the financial tools available to Treasury—to defeat and degrade terrorist organizations like ISIL. We must continue to leverage our ability to impose crippling sanctions on states and individuals to change behavior. We must seek to eliminate the proliferation of nuclear weapons. Cyber attacks on our financial system represent a real threat to our economic and national security, and maintaining vigilant and coordinated efforts to keep pace with and respond to these threats has been and will remain a crucial piece of Treasury’s work. And we must recognize global climate change for the economic and existential threat that it is and band together with the rest of the world to avert catastrophe. How to Make Our Vision a Reality How do we accomplish the goals laid out above? To be sure, there are a host of paths policymakers might take to do so, but I believe the following steps, which range from specific policy prescriptions to more general advice, are the most immediate. Infrastructure Spending Moving forward, we must redouble our efforts to make investments in our country’s transportation infrastructure, which help create middle-class jobs in the short term and drive broad-based economic growth in the long term. Indeed, by fixing our aging roads, bridges, and ports, we will help lay a foundation for widely shared economic expansion. The President’s business tax reform framework, discussed in more detail below, would generate substantial one-time revenues to fund new infrastructure investments. Paying for these investments by taxing overseas business profits would both be fiscally responsible and would help fix the perception that our tax system is not a level playing field. Continuing to come up with fresh, new ways to deploy capital will help the country achieve these goals. Effective partnerships between government and the private sector can play an important role in developing innovative solutions that efficiently leverage resources. And taking advantage of historically low interest rates to fund high-return public investments is simply smart fiscal policy. This Administration has long advocated for the creation of a national infrastructure bank, which would provide critical financing and technical support to foster public-private partnerships in U.S. infrastructure and establish a predictable source of long-term financing that would allow U.S. infrastructure to be consistently improved. Business Tax Reform Over the last eight years, Congress and the Administration have taken important steps to make the tax code fairer, support working families, and roll back unnecessary and unaffordable tax cuts for high-income families. In addition, using its administrative tools, the Administration has made substantial progress over the past eight years in combatting abusive tax practices. However, our business tax system remains in need of reform. As I have emphasized repeatedly throughout my time as Treasury Secretary, only Congress can enact business tax reform, which is necessary to remove incentives for businesses to relocate overseas, raise one-time revenues to promote infrastructure spending, and simplify tax compliance for smaller businesses. President Obama’s proposed plan for business tax reform sets out a framework for modernizing our business tax system. Among other elements, it would prevent companies from using excessive leverage in the United States to reduce their tax burden, impose a minimum tax abroad to help fight the global race to the bottom, impose a one-time tax on unrepatriated foreign profits, and reform the taxation of financial and insurance industry products. It also would close loopholes and special credits and deductions to lower rates without shifting the tax burden to individuals. Enacting such a plan would enhance our competitiveness and create an environment in which business rather than tax considerations drive decision-making. The President’s framework is also fiscally responsible, ensuring that business tax reform does not add to deficits over the long-term. I am hopeful that this framework will help to equip the new Congress to take responsible action on business tax reform. Housing Finance Reform Fixing our housing finance system remains the major unfinished work of post-financial crisis reform. Though the housing market has made significant strides thanks to efforts on the part of the Administration to help struggling homeowners, stabilize the housing finance system, and restore broader economic growth, many homeowners and neighborhoods continue to struggle. Fannie Mae and Freddie Mac remain in conservatorship and continue to rely on taxpayer support. Only legislation can comprehensively address the ongoing shortcomings of the housing finance system. A starting point for such legislation should be the principles President Obama laid out in 2013, which stressed a clearly-defined role for the government to promote broad access to consumer-friendly mortgages in good times and bad. While private capital should bear the majority of the risks in mortgage lending, reform also must provide more American households with greater and more sustainable access to affordable homes to rent or own. Global Economic Integration Global economic integration, including high-standards trade, leads to better economic outcomes than isolation and protectionism. High-standard trade agreements such as the Trans-Pacific Partnership can expand U.S. economic growth, open markets for American exports, and strengthen labor and environmental safeguards so that American workers can compete on a level playing field. But economic uncertainty, both domestically and abroad, threatens this framework. Whether driven by trade, technological advances, or the changing structure of the markets for labor and capital, these anxieties are real and deeply felt. In order to continue to enjoy the benefits of an integrated world, we need to focus on policies that address the real issues of inequality, such as slowing wage growth and increasing disparities in pay, to ensure that the benefits of trade are broadly felt. Strengthening the rules, alone, is not enough. To preserve this important engine of economic growth and international integration the United States and other advanced economies must also design and implement policies—including fiscal and tax policies—that advance the cause of inclusive, sustainable, and broad-based growth. Not all countries have the fiscal space sufficient to meet these needs, but after years of urging by the United States, policies of austerity are one-by-one giving way to policies designed to grow demand and improve incomes. The United States must continue to be an active voice in the global discussion of these issues. The United States must also maintain its leadership in the international financial architecture and ensure that the U.S.-led international financial system is adapting to best preserve U.S. interest in a changing world. This includes continued governance reforms of the IMF and multilateral development banks to reflect a changing world. Clear global rules create opportunities and incentives for innovation, invest, and work, which are critical to the United States and drive economic progress in other regions of the world. Continued Engagement with Challenging Partners Just as global economic integration has fueled economic growth, that integration—and our economic strength—provides us with additional tools to advance our priorities on the international stage. We should continue to use these tools judiciously to maintain pressure on those countries that take aggressive and destabilizing actions, such as Russia and North Korea, and provide sanctions relief when the targeted malign behavior changes, as with Iran and Burma. And, as we chart new courses with other countries, such as Cuba, we should be mindful of how we can use our economic tools to create the conditions for a changed relationship. We must always take care to avoid the overuse of sanctions, particularly our most unilateral tools like secondary sanctions that extend to non-U.S. persons. If we overuse these powerful tools, we risk lessening their impact when they are most needed and ultimately threaten our central role in the global financial system. Looking Forward with Optimism We have learned the hard way that deadlock does not produce good results—government shutdowns and near default on our debt cost the United States both economically and in standing around the world. It did not work in the 1990s, and it did not work over these past eight years. What has worked is finding opportunities in the sometimes quiet periods when bipartisan cooperation can lead to honorable compromise. In recent years, we have seen that targeted budget agreements could pave the way for more orderly and economically beneficial outcomes. We have seen that, on issues like creating a path forward for Puerto Rico and multi-year funding for our surface transportation programs, bipartisan compromise is still possible. But there is much more that requires this kind of progress. Treasury plays a critical role in finding areas where bipartisan solutions are possible. In a period when many thought little could be accomplished legislatively, we reached agreement on IMF Quota Reform, an approach to deal with Puerto Rico, and a permanent extension of expansions to the earned income tax credit and child tax credits that will reduce the extent or severity of poverty for millions of families with children. We have also used our existing authorities to limit corporate tax inversions, shed greater light on beneficial ownership to limit tax avoidance, realize tax parity for same-sex spouses, and opened relations with Cuba. And we have used our sanctions authorities to bring Iran to the negotiating table and limit the resources available to terrorist regimes and groups. I am proud of the record we have built over the past eight years. But during calmer economic times, policy makers are often tempted to roll back regulations, weaken reforms, and reduce oversight. I hope that future policymakers will take careful stock of the successes of this Administration as they consider the next steps forward. I remain an optimist about America’s future and wish the next team entrusted with responsibility for governing much success as it tackles the many challenges that remain and the new challenges that will present themselves over the coming years. Margaret Mulkerrin is the Press Assistant at the U.S. Department of Treasury. ###
Flight times are longer now than they were 40 years ago. Here's why.
They want to be like the Koch Brothers and the Mercers for campaign tech, but much cheaper, faster and smarter — and for Democrats.Higher Ground Labs, the incubator fund that last year put $2.5 million behind 12 start-up companies specifically focused on pumping up Democratic campaigns, says its beta test worked, so it will unveil its second round of financing on Tuesday for 11 new companies. Each is getting $100,000 of seed capital, with the rest of the money on reserve for programming and follow-up funding for successes.The fund takes 6 to 8 percent equity in each company, and says profits will be reinvested in future expansion.“People who have given money before are craving a different way to participate and a different way to invest in the Democratic Party,” said Betsy Hoover, a Higher Ground Labs co-founder and the digital organizing director for the Obama 2012 campaign.The list of investors includes Reid Hoffman, co-founder of LinkedIn, SoulCycle founders Alan and Elizabeth Cutler, and big Silicon Valley investors Tamim Mourad, Ron Conway and Scott Mason.Of the new groups, one provides software to automate the process for fundraising calls. Another streamlines online polling for faster, more accurate online polls. Still another connects people to activism through analyzing their social media interests, while a fourth uses that public information to tailor ads and other voter appeals.The idea was simple when it started to come together last year: while groups like Indivisible and Swing Left emerged to channel the explosion of Democratic activity after President Donald Trump’s election, Higher Ground Labs would tackle the widespread recognition that Republicans in 2016 had smoked the Democrats in an area that for a decade had been their main electoral advantage.All of it comes as the Democratic National Committee has been racing to rebuild its own tech operation, left atrophied after years of mismanagement.“Where innovation is at its healthiest, there are a bunch of really smart people trying a bunch of cutting edge things. The party is not equipped to provide that space, either in resources or in speed and agility of strategy,” Hoover said. “What the party is equipped to do is take the things that are working well and quickly scale that.”Perhaps more important than the seed money has been the network and connections provided by Higher Ground Labs. It’s board is stocked with prominent alumni of the Obama campaign, offering a seal of approval to start-ups looking to attract clients and new investors.They’re looking to win races, but they’re also looking to turn a profit.“It’s not just that were investing in these companies, but able to provide them with the kinds of contacts and relationships and expertise that also helps them grow,” said Ron Klain, the former Al Gore, Joe Biden and Hillary Clinton adviser who serves as Higher Ground Labs board chairman.Several of the companies originally financed and nurtured by the small fund were cited as providing crucial help in last year’s races in Virginia. Eight of the initial round of companies were active in the state’s elections, and claim to have been involved in reaching out three million times to voters.One of those, Mobilize America, provides an online platform to help connect campaigns with interested volunteers, to work both locally and remotely. For 11 Virginia House of Delegates candidates last year, they say they connected about 6,000 “shifts” of time — each two or three hours of knocking on doors or making phone calls. For Rep. Conor Lamb’s special election win in Pennsylvania last month, they tracked 4,000 shifts, including 1,300 just on the Friday before the election, which he went on to win by a very tight 670 votes.The start-up’s overhead is low, and so is the cost: depending on campaign size, the charge is between several hundred and several thousand dollars per month.“By virtue of connecting directly to the online community that wants to help candidates, we can win races. We can figure out how to mobilize the movement into an electoral force,” said Mobilize America co-founder and CEO Alfred Johnson.Johnson said that for 2018, the company is expecting to work with 10-20 campaigns, as well as some of the newer grassroots groups, coordinated campaigns at the state level and Democratic campaign committees out of Washington. None of it would be possible, he said, without the initial help from Higher Ground Labs and the continued advice they’re getting. Some of the incubator fund’s investors have since turned around and invested in the company directly.The rest of the companies in the first round have similar stories, like one that taps social networks to help people make more personal voting appeals in campaigns or another that has built an updated database of every candidate running for every office around the country to create custom voter guides.The goal is to add 10-15 companies each year, with about the same amount of investment in each to retain the boutique, hands-on approach to the accelerator. But the goal is also to keep making profitable companies.“HGL has become category-defining institutional capital for innovation in the progressive movement,” said Shomik Dutta, the fund’s other co-founder and a former Obama fundraiser.Once Higher Ground Labs invests, they bring in the companies for three days per month of training around understanding the world of contemporary political technology, then building products and marketing within it. Companies will head to Washington June 11-14 for a series of pitch meetings hosted by the DNC that all the major party committees will attend, and then to San Francisco July 16-19 for a demonstration day with investors.The DNC is happy to have the help, and the competition. They desperately need it.“If we had infinite funds and infinite resources, it would be great to build this all in-house. We have none of those,” said Raffi Krikorian, an alum of Twitter and Uber who was hired as the DNC’s chief technology officer last year to start getting the party headquarters back up to speed. “Let people do some of the R&D work with a different set of funds.”
The French striker, who cut his teeth in futsal, is a late bloomer but still harbours hopes of playing at this summer’s World CupIt was not quite the instant impact Wissam Ben Yedder once produced in a national team shirt but it nonetheless marked the fulfilment of a dream. His first senior appearance for France, replacing Olivier Giroud for the last 17 minutes of last month’s friendly against Colombia, passed with relatively little fanfare and its place in the wider narrative was diminished by Les Bleus contriving to turn a 2-0 lead into defeat. Whether it progressed Ben Yedder’s claim to a World Cup place remains to be seen but the Sevilla striker, whose club side play Bayern Munich in a Champions League quarter-final first leg on Tuesday, has battled greater odds. Related: Champions League quarter-finals: tie-by-tie analysis Continue reading...
The female teams and WSL viewing figures are on the increase, but falling attendances are a cause for concernOne year ago the Football Association gathered the media at Wembley with little detail on what would be discussed beyond “women’s football”. There, the new head of women’s football Sue Campbell, chief executive Martin Glenn and head of participation Kelly Simmons outlined their Gameplan for Growth – a bold plan to transform participation, support and success on an international stage. It was hard not to absorb the enthusiasm.One year on a lot has changed. For a sport that has struggled for media presence, the distasteful handling of off-field events has dominated headlines. Yet while the FA’s actions in those cases has been damaging, the seeds of the Gameplan for Growth have been planted in the shadows of the controversy. And those seeds are sprouting in nearly every area. Continue reading...
Authored by Jeff Thomas via InternationalMan.com, The American colonies were made up of people who could not accept the downward progression in Europe and said, “I’m leaving.” That took great courage, as they were leaving their few known comforts for unknown difficulties. However, once they had made the move and overcome the difficulties of settlement, they understood that their courage had been rewarded. Such people never look back and say, “Maybe we shouldn’t have left.” There can be little doubt that they taught their children and grandchildren the values of courage, determination, hard work, and self-reliance. And more and more immigrants were added to their numbers, each of whom was also courageous enough to abandon Europe for freedom and opportunity. They raised generations of people with a “pioneer spirit.” Not surprisingly, then, that when the American colonists were squeezed by King George for increases in tax, it wasn’t difficult for them to refuse. They chose to go it alone, rather than allow the British king to steal the fruits of their labours. Although the tax level at that time was a mere 2%, it was the principle that taxation is theft that angered them. Further, they had already proven to themselves that they had all the character qualities necessary to determine their own future. And so, in a sense, the American Revolution was Act II of the quest for freedom and, of the two challenges, it may have been the easier one to face. However, the America of the late eighteenth century is not the America of today - and the outcome will not be the same for Americans in the present era. It’s important to remember that only a very small percentage of people actually left Europe to find freedom. The great majority remained behind, complaining about the ever-increasing loss of freedoms, but doing nothing about it. Although their governments took more and more from them, the great majority simply tolerated it, saying, “What can you do?” They became the eventual victims of that oppression, as has happened throughout history. Those in America today are, in essence, a subjugated people, just as Europeans were prior to the American Revolution. They’re accustomed to the concept of the “nanny state”—one which taxes its people heavily and throws back a portion of what they’ve stolen in the form of “bread and circuses,” as in ancient Rome. Americans today complain continually, either that too much is being taken from them or that the state isn’t providing them with sufficient largesse. Some even complain of both at the same time. And yet, a very large percentage of Americans holds out “hope” that somehow, the process will reverse itself—that a new political candidate will appear—a “Freedom Fairy,” who will somehow stand in front of the runaway train, stop it, and reverse it. Historically, this never happens. What happens is that a small number decide to set sail and escape. Whether it’s the Roman commercial class, who walked away from their shops and travelled north to live amongst the barbarians, rather than accept Rome’s increasing domination, or the German Jews who locked up their shops and homes and boarded ships to the West, just prior to the lockdown of 1939, every burgeoning new “free” society has been created by the few who took courage and made an exit from a dying society. In every case, those who exited did so with fear in their hearts that they would fail. They left their larger possessions behind and travelled light, sewing coins and jewellery into their clothing, not knowing whether they would succeed. However, when they arrived at the new frontier, they met other like-minded people, each of whom had also shown courage and determination. They then created a new society that was, predictably, based upon the principles described above. Today, a similar exodus is occurring. It’s made of those who place their liberty and hope for a promising future above the comforts and freedoms that, one by one, are being taken from them by their governments. Of course, the details are not the same. They no longer travel by ship, but by jet. No one sews valuables into their clothes, as they’d never get through the metal detectors. Instead, they convert their assets to cash and purchase precious metals, to be stored in a country where there is diminished risk of confiscation by governments. As has happened throughout history, the exodus is being undertaken quietly. Those who emigrate do not wish to call attention to themselves, but then, neither do the governments of the countries they’re leaving. It’s never seen on the news, and the official numbers who leave are far below the number that actually departed. But the details of the exit are unimportant. What is important is that, when people meet the challenge to exit to find freedom and self-determination, they then build an extremely strong and free society. And there are many locations in the world where this is presently taking place. But what of those left behind? Surely, the present-day US is at a breaking point and may very well explode into civil disobedience—even revolution. Yes, this is quite so. And again, history shows us what happens in countries where the majority feel that they’re entitled to be looked after; that the rich must “pay a little more” to provide them with largesse. Good examples of this are the Russian Revolution and the French Revolution. Both of these are marked by a predominance of belief that “someone has to pay so that I can benefit.” In both revolutions, the aristocracy were violently removed and the rebels scrambled to grab as much of the spoils as possible. Disorder became prolonged and the new leaders that rose up were, if anything, more oppressive than those they replaced. Today, in visiting the US and talking with Americans, it’s palpable that most Americans now have a gut feeling that this will most certainly not end well. Most hope that there might be a peaceful transition of some sort. Some vainly hope that a “Freedom Fairy” will emerge. But, Americans, more than most people in the world, incorrectly believe that freedom only exists in their country and that, when it dies there, it will die everywhere. This is far from true, but it does mean that those who were born in the former “land of the free” are more fearful and discouraged than those elsewhere. The great majority doubt that it’s possible for them, individually, to choose freedom, rather than to go down with the ship. They, in effect, are exactly the same as the great majority in Europe in the eighteenth century. The American colonies were built upon the courage of a few who chose to leave the dominance and stagnation in Europe. The same is true today. The USA may be a sinking ship, but the concept of “America” is not. It’s a movable concept and it can exist anywhere that people have chosen future freedom over tentative comforts. * * * A “pioneer spirit” isn’t the only thing you need if you want to leave the sinking ship and pursue freedom. You’ll find details on what else you’ll need in Doug Casey’s special report, Getting Out of Dodge. Click here to download your free PDF copy.
Daniel L. Davis Security, Asia Kim Jong-un did not press relentlessly over the past five years to produce an operational ICBM nuclear missile force to then immediately give it away because of a UN resolution. Chinese state media on Tuesday confirmed North Korean leader Kim Jong-un had visited Chinese president Xi Jinping in Beijing earlier this week. While the significance and true purpose of the trip remains to be determined, the position of the United States remains effectively unchanged: we remain in the dominant position, time is on our side, and there will be no war on the peninsula unless we start one with a preventive strike. Coming barely a month before the summit between South Korean president Moon Jae-in, Kim’s visit appeared designed, at least in part, to convey a renewed solidarity between Pyongyang and Beijing. Chinese state media reported that the China/North Korea relationship had been “cultivated meticulously by the elder generations of leaders of both parties and both countries, was the precious wealth of both sides.” Kim, China’s Global Times said, told Xi that the “issue of denuclearization of the Korean Peninsula can be resolved, if south Korea and the United States respond to our efforts with goodwill . . . while taking progressive and synchronous measures for the realization of peace," which likely reflects one of Kim’s objectives of negotiations: getting early sanctions relief or quid pro quo concessions from Trump. That’s not likely to find a receptive audience in the White House. Last October Trump tweeted that, “Being nice to Rocket Man hasn’t worked in 25 years, why would it work now?,” adding that he believed “Clinton failed, Bush failed, and Obama failed. I won’t fail.” National Security Advisor-designate John Bolton is probably the least likely person on the planet to counsel Trump to give Kim rewards for small steps. Read full article
Robert A. Manning, James Przystup Security, Asia Now is the time to test all Kim’s promising rhetoric about dismantling North Korean nuclear weapons. It’s Springtime, and on the Korean Peninsula diplomacy is in full bloom, replacing, for the moment, the bellicosity of Fire and Fury and regime change. The surprise Xi-Kim Summit has set the stage of the April 27 North-South Summit and a subsequent Trump-Kim Summit in May. Even Japan’s Prime Minister Shinzo Abe is trying to arrange a Summit with Kim. At a time of promising diplomatic breakthroughs, the still mysteriously absent critical agenda setting and policy questions must be addressed in Seoul and Washington. The challenge now is to test Kim’s promising rhetoric about dismantling North Korean nuclear weapons. President Moon has tied progress in South-North relations to progress in DPRK-U.S. efforts at denuclearization. But Moon’s focus is Korea-centric—aimed at advancing reconciliation through enhanced social, economic interaction and the building of a “peace regime.” It remains unclear if denuclearization will be on the agenda. The policy challenge for Seoul and Washington will be to effectively tie South-North reconciliation to U.S.-DPRK denuclearization. This will require diplomacy of a high-order. White House fears of a flawed North-South accord helps explain why Trump threatened to put the KORUS trade accord on hold. At the Blue House, preparations for the April 27 Summit are operating at a level beyond “Close Hold, Top Secret.” Few in the ROK government outside of a handful of Blue House senior advisors are privy to planning. While a breakthrough toward some form of loose political association is a long-shot, U.S. policy should be prepared for South-North communique that would state Pyongyang’s offer of a nuclear and missile freeze as a first, interim step toward denuclearization. This would leave Seoul and Pyongyang setting the table for the Trump-Kim Summit and the Northeast Asia security agenda. As these two summits approach, there are some important “do’s” and “don’ts” that should inform policy and diplomacy in Seoul and Washington. The first is to strictly adhere to the diplomatic doctrine of “No Surprises.” Policy coordination is critical to avoid landmines that could reverse momentum and move the peninsula back toward tension and confrontation. The second is to have North Korea define exactly what it means by denuclearization. It will be no small task for intelligence and think-tank analysts to unpack Kim’s statements in Beijing on the nuclear question: Read full article
Despite the deteriorating security situation, there are some signs of progress in the field of disarmament, such as the intention of the Democratic People’s Republic of Korea (DPRK) and the United States to hold summit talks, a senior United Nations official said Monday.
First he planned to deport 40,000 people from Israel. Then he backed off. And now…?
Shares of Alnylam (ALNY) fall by more than 8% after Pfizer reports top-line results from the phase III study of tafamidis.
Having gone nowhere for the past year of Nafta negotiations, the Trump administration is said to be pushing for the U.S., Canada and Mexico to reach a Nafta deal in principle to be announced at the Summit of the Americas in Peru on April 13-14, Bloomberg reported citing three people familiar. The US will host Nafta negotiators in Washington this week, where it hopes to achieve a breakthrough on significant remaining differences, Bloomberg said, adding that under the White House push, leaders of the three nations would be able to announce at regional summit that they’ve reached agreement on the broad outlines of an updated Nafta deal, while technical talks could continue to hammer out the finer details and legal text. While it is unlikely that full deal will be penned, the meetings may make enough progress on issues including automotive rules of origin to host an eighth round of talks with the full negotiating teams in Washington next week. Goal is also to advance as much as possible toward the Trump administration’s goal of an announcement in Peru Still, disagreement persists and significant differences remain on issues ranging from automotive content to government procurement, and there is no assurance an agreement, even in principal, can be reached. As part of the last minute blitz negotiations, Mexican Economy Minister Ildefonso Guajardo will travel to Washington for meetings with U.S. Trade Representative Robert Lighthizer on Wednesday, while Trump's adviser and son-in-law Jared Kushner and Mexican Foreign Minister Luis Videgaray - who have been the lead people for managing the relationship between President Donald Trump and his Mexican counterpart Enrique Pena Nieto - will also meet in Washington this week. Separately, Canadian Foreign Minister Chrystia Freeland will travel to Washington to meet with Lighthizer on Friday and may also meet with Mexico’s top Nafta negotiators at the same time. “Canada is committed to concluding a modern, mutually beneficial Nafta as soon as possible,” said Adam Austen, a spokesman for Freeland, while declining to comment on her meeting schedule. In immediate response to the news, both the Mexian peso - which led EM FX losses for much of the day - and the Canadian loonie spiked, after a sharp move higher in the dollar during today's equity selloff depressed the rest of G-10 FX.
OMG NOT CLEAR BACKPACKS! ‘KIDS’ DEMANDING MORE GOV SUDDENLY NOT SO HAPPY WITH MORE GOV. As “RBPundit” tweeted today, “Marjorie Stoneman-Douglas students should not have their right to an opaque backpack (let’s call them ‘Assault-style backpacks’) infringed because of one crazed individual.” But then, a century ago, during the heyday of early “Progressive” Woodrow Wilson, […]