Brookings: Topics - Michigan

Negative Equity Concentrated in a Few States

Ted Gayer — Fri, 02 Mar 2012 00:00:00 -0500

Yesterday’s release of CoreLogic’s negative equity report showed that in the fourth quarter of last year there were 11.1 million residential properties with a mortgage in negative equity, which is 22.8 percent of mortgage holders. This is slightly higher than the 10.7 million (22.1 percent) from the third quarter. The CoreLogic data show wide variation across states in the percentage of mortgage holders that are underwater. Nevada leads the list with 61 percent of all of its mortgage properties underwater (an increase from 58 percent in the third quarter), followed by Arizona (48 percent), Florida (44 percent), Michigan (35 percent) and Georgia (33 percent).

The average underwater borrower has about $65,000 of negative equity, which yields an aggregate debt overhang of approximately $717 billion nationwide. This aggregate burden varies widely across states. The table below shows state-level data of the number of mortgage properties that are underwater, the average amount of negative equity for these properties, the aggregate negative equity, and the state’s share of the national mortgage debt overhang. While Nevada has the highest proportion of mortgage holders that are underwater, it is the sixth highest state in terms of aggregate negative equity. California has about 2 million mortgaged properties underwater, with an average amount of negative equity across these properties of approximately $92,000. This translates into mortgage debt overhang of about $187 billion, which is the highest among the states and about 26 percent of the total national mortgage debt overhang. Florida has the next highest share of the total national mortgage debt overhang at about 16 percent. The aggregate amount of negative equity in four states (California, Florida, Arizona, and Massachusetts) makes up over 50 percent of the approximately $700 billion of nationwide negative equity overhang.

The administration has recently increased taxpayer-financed incentives to banks to engage in more principal reductions for underwater borrowers, and it has pressured Edward DeMarco, acting director of the Federal Housing Finance Agency, to allow principal reductions for Fannie Mae and Freddie Mac loans. The distribution of negative equity across states suggests that any serious attempt at wide scale principal reductions would reap benefits to borrowers concentrated in only a few states.

State	Negative Equity Mortgages	Average Negative Equity Amount	Aggregate Negative Equity	Percentage Share of Nationwide Aggregate Negative Equity
Alabama	43,431	$44,526	$1,933,808,856	0.27%
Alaska	6,273	$48,473	$304,071,971	0.04%
Arizona	631,126	$58,704	$37,049,636,573	5.18%
Arkansas	25,676	$71,662	$1,839,983,520	0.26%
California	2,041,276	$91,621	$187,024,071,967	26.14%
Colorado	241,682	$43,488	$10,510,260,953	1.47%
Connecticut	111,140	$112,147	$12,463,982,075	1.74%
Delaware	28,919	$77,112	$2,229,996,542	0.31%
Florida	1,916,082	$57,905	$110,950,170,016	15.51%
Georgia	541,178	$41,147	$22,267,822,137	3.11%
Hawaii	24,118	$97,578	$2,353,394,765	0.33%
Idaho	64,135	$45,393	$2,911,301,900	0.41%
Illinois	489,535	$59,412	$29,084,236,461	4.07%
Indiana	69,123	$36,369	$2,513,963,937	0.35%
Iowa	38,125	$55,444	$2,113,790,975	0.30%
Kansas	32,552	$44,288	$1,441,668,766	0.20%
Kentucky	26,704	$69,100	$1,845,246,383	0.26%
Louisiana	36,546	$144,987	$5,298,693,940	0.74%
Maine	7,662	$58,723	$449,935,894	0.06%
Maryland	331,159	$63,243	$20,943,444,374	2.93%
Massachusetts	240,887	$127,772	$30,778,641,582	4.30%
Michigan	480,075	$40,143	$19,271,670,396	2.69%
Minnesota	109,407	$38,566	$4,219,372,191	0.59%
Mississippi	11,209	$42,347	$474,669,190	0.07%
Missouri	137,177	$41,959	$5,755,815,289	0.80%
Montana	10,754	$66,122	$711,071,659	0.10%
Nebraska	26,140	$57,584	$1,505,239,249	0.21%
Nevada	343,256	$82,435	$28,296,313,698	3.96%
New Hampshire	47,206	$53,056	$2,504,538,822	0.35%
New Jersey	329,780	$78,782	$25,980,883,310	3.63%
New Mexico	36,898	$82,371	$3,039,337,194	0.42%
New York	122,125	$130,341	$15,917,855,328	2.23%
North Carolina	205,764	$54,865	$11,289,339,673	1.58%
North Dakota	3,763	$58,326	$219,478,984	0.03%
Ohio	526,802	$30,878	$16,266,566,980	2.27%
Oklahoma	33,205	$60,754	$2,017,331,352	0.28%
Oregon	131,126	$40,102	$5,258,416,029	0.74%
Pennsylvania	156,376	$71,702	$11,212,482,487	1.57%
Rhode Island	52,286	$78,393	$4,098,877,472	0.57%
South Carolina	99,936	$52,123	$5,208,989,529	0.73%
South Dakota	NA	NA	NA	NA
Tennessee	162,058	$39,203	$6,353,082,233	0.89%
Texas	347,021	$43,374	$15,051,777,345	2.10%
Utah	100,687	$43,879	$4,418,092,031	0.62%
Vermont	NA	NA	NA	NA
Virginia	303,800	$63,596	$19,320,458,450	2.70%
Washington	271,505	$50,279	$13,651,107,650	1.91%
Washington, DC	12,446	$83,987	$1,045,297,365	0.15%
West Virginia	1,225	$76,345	$93,522,139	0.01%
Wisconsin	104,548	$54,206	$5,667,083,140	0.79%
Wyoming	5,056	$44,377	$224,371,648	0.03%

Source: CoreLogic

Authors

Ted Gayer

Image Source: © Mike Segar / Reuters

Republican Candidates Don't Get Michigan (and Manufacturing)

Jennifer Bradley and Bruce Katz — Sat, 25 Feb 2012 00:00:00 -0500

Politics and economic policy are intersecting right now in Michigan, with important lessons for the rest of the country. Against the backdrop of the federal government’s rescue of the auto industry, presidential candidates are campaigning in a state that took a huge hit in the recession but has since rallied to post one of the strongest recoveries of any place in the nation.

Michigan is ground zero for the ferment in U.S. manufacturing, the sector that has done so much to power the recovery and a surge in overseas demand for American products. The resilience of the auto industry has played a significant role. American vehicle sales rose to 12.8 million in 2011. The Big Three claimed 47 percent of market share, their best showing since 2008.

Ford earned $20 billion, its best earnings since 1998 and its second-biggest annual profit in the company’s 109-year history. GM regained its position as the world’s largest-volume automaker and notched a record profit of $7.6 billion. Chrysler rebounded from a $652 million loss in 2010 to post a $183 million profit last year, its first full year of positive earnings since 2005.

Even if manufacturing does not regain the outsized share of GDP and employment it once had, it remains powerful engine of innovation, a driver of exports that are taming our trade deficit, and a source of good-paying jobs. Successful manufacturers, from giant auto companies to small machine shops, are pivoting to new lines of business like clean energy, adapting to new technology, and embracing a culture of continuous learning.

In states like Michigan leaders are looking to the future, one driven by innovation. By contrast, our national politics is still stuck in the past. Michigan’s GOP primary contest makes this all too clear.

When the leading GOP candidates talk about manufacturing in Michigan, they are usually squabbling over the wisdom of the auto industry bailout. This argument over counterfactuals (would the industry have bounced back without the bailout? How fast?) misses the point - what will the candidates do to make sure that American manufacturing stays strong?

When they do get around to answering that question, Governor Romney and Senator Santorum put forward proposals that show they are only partly listening to what the makers and innovators really need now.

In a speech last week to the Detroit Economic Club, Senator Santorum pledged to eliminate taxes on manufacturers and allow companies to repatriate profits tax free if they invest that money in plants and equipment. He also promised a 20%, permanent R&D tax credit. Governor Romney followed essentially the same script at his own DEC speech this past Friday, although he alluded to the need for greater private-sector investment and the importance of our institutions of higher learning. But, fundamentally, the focus of both candidates’ announced plans is on lowering taxes.

Certainly, manufacturers are very happy to pay lower taxes and welcome more support for research. But 21^st century manufacturing needs a lot more to flourish - and some of that has to come from government.

At a forum on innovation in Washington earlier this month, the chief executives of GE, Dow Chemical and Boeing mentioned tax policy, but they also pointed out the importance of immigration, education (especially in science, technology, engineering and math), attracting foreign direct investment, and the cut-and-invest policies in the deficit commission report. They also stressed the importance of learning from Germany and its interplay of universities, research centers, firms, and workers.

The federal government should be asking the important questions: What do companies and workers need to flourish in an economy driven by production and exports? What are the market gaps in providing capital, or applied innovation, or worker training? How can federal policies galvanize the talents of states and metros where industries are located?

Manufacturers know you can’t get into overdrive if you’re stuck in reverse. As Governor Romney and Senator Santorum travel through Michigan and other states, they should focus on what matters to the people who are driving the recovery and explain how they will deliver. They should aspire to collect ideas, not just delegates.

Authors

Publication: Global Public Square, CNN.com

Image Source: © Sarah Conard / Reuters

Michigan's Urban and Metropolitan Strategy

Thu, 23 Feb 2012 00:00:00 -0500

This report was launched at a February 23, 2012 Detroit Economic Club and Business Leaders for Michigan event. View video from the event »

Editor’s Note: Jennifer Bradley, fellow and co-director of the Great Lakes Economic Initiative, and Bruce Katz, vice president and director, are the lead contributors from the Metropolitan Policy Program at Brookings.

Why has Michigan enjoyed the second-strongest post-recession recovery among the 50 states? Because the state and its metropolitan areas are rich in the assets that will drive the next economy in the U.S. and around the globe.

The recovery has been powered by manufacturing, and Michigan’s metropolitan areas are where innovation prowess meets manufacturing experience. Ninety percent of the state’s high-tech industry employment and 80 percent of its advanced manufacturing jobs are in metropolitan areas. Six Michigan metropolitan areas had a higher number of patents per 1,000 workers from 2001 to 2010 than the average U.S. metropolitan area.
Exports have moved the US economy forward, as our manufactured goods have met ready markets abroad. Michigan’s metropolitan areas are also exceptional at producing goods and providing services that are in demand abroad. Of the 100 largest metropolitan areas in the United States, Detroit is 12th in terms of export intensity (the share of its output that is exported), and Grand Rapids ranks 8th. Thirteen of Michigan’s 14 metro areas are more export-intense than the U.S. average.
U.S. manufactured goods and exports are competitive to the extent that they are innovative. Michigan’s metropolitan areas are home to strong and emerging industry clusters and powerful anchor institutions like universities, medical centers, and research institutes that invent and commercialize new technologies and services.

For the past year, Business Leaders for Michigan, Public Sector Consultants, and The Brookings Institution Metropolitan Policy Program have been analyzing Michigan’s metropolitan areas to determine how state policy can best prepare the state’s metros, its economic engines, for the next economy.

We recommend that Michigan leaders:

1. Strengthen the link between innovation and manufacturing to increase regional exports and attract global investments.

Reorient the 21st Century Jobs Fund to include manufacturing and innovation, particularly among small manufacturers.
Create a strong foreign direct investment (FDI) strategy to attract innovative firms that fill gaps in key manufacturing clusters.
Help small manufacturers and service businesses increase exports through robust export assistance, promotion, and financing.

2. Support strong regional systems to train existing workers and welcome new ones to fuel economic growth.

Use existing workforce dollars to drive regional workforce strategies that match cluster strengths.
Seize the opportunity to demand changes in federal workforce laws.
Help highly educated immigrants gain Michigan professional certifications.

3. Make targeted investments that leverage distinct assets in urban and metropolitan areas to transform regional economies.

Support a small number of urban and metropolitan industry clusters with grants tailored to the specific needs of emerging, existing, or advanced clusters.
Designate one to three new “urban innovation districts” that connect innovation-generating anchor institutions with infrastructure, housing, and amenities, and support them with a 21st Century Places Fund.

Downloads

Video

Michigan Poised to Move Ahead in Next Economy

Publication: Metropolitan Policy Program at Brookings and Public Sector Consultants

Image Source: © Rebecca Cook / Reuters

Web Chat: States and the Economic Recovery

Jennifer Bradley — Wed, 22 Feb 2012 00:00:00 -0500

The nation’s governors are gathering for their annual winter meeting in Washington, and jobs and economy will be the top items on the agenda. Frustrated with Washington’s partisan gridlock and lack of progress on the economy, many governors are now pressing forward with innovative solutions to jumpstart their economies at the state level and lay the foundation for long-term growth.

On February 22, Jennifer Bradley answered your questions on the economic health of the states during a live web chat with POLITICO.

12:30 Vivyan Tran: Welcome everyone, let's get started!

12:30 Jennifer Bradley: State innovation is part of the genius of our federalist system. Health care reform was law in Massachusetts years before the recent passage of federal legislation. During the 1980s, governors from both parties experimented with welfare and healthcare reforms, paving the way for federal advances in the next decade. Throughout the 1950s, public university systems, established by states like California and North Carolina, set the stage for the federal technology investments of the 1960s and 1970s. And before he was president, New York Gov. Franklin D. Roosevelt experimented with interventions that foreshadowed the New Deal.

With Washington mired in gridlock, states have no choice but to innovate. Smart governors are working with partners in metropolitan areas, which concentrate people, jobs, GDP, and innovation potential and are critical for job creation, revenue generation, and economic growth.

12:30 Comment From Tim: What are a few examples of innovation at the state level that have helped local economies get back on their feet again?

12:32 Jennifer Bradley: States like Nevada, Tennessee, and New York are organizing their economic development strategies around the needs of local and metro economies. They are focusing on aligning resources metros need, rather than sticking with the same old state agency stovepipes.

12:32 Comment From Katie: I see that you're with Brookings's Great Lakes Initiative. It seems as though Detroit and the whole region is experiencing a resurgence at the moment. What do you attribute this success to?

12:35 Jennifer Bradley: Manufacturing turns out to be a source of strength in the recovery (and will likely continue to be a source of economic strength, since it's so closely tied to innovation, which is the engine of economic growth). Places that have hung on to their manufacturing, particularly in sectors in which the U.S. as a whole is strong—like autos and transportation, and chemicals—have gained as those sectors have rebounded.

12:35 Comment From Sam: How successful have states in the "rust belt" been in revitalizing their economies following the recession?

12:38 Jennifer Bradley: This is a nice follow up to the previous question. States in the Midwest/Northeast that have done well have done so by really focusing on innovation and linking that to their manufacturing sector. Ohio has done this through its Third Frontier innovation program; Michigan has done this through its 21st Century Jobs fund to some extent. Focusing on exports also has been critical, because the recovery is also export-driven—all those manufactured goods are finding eager purchasers abroad.

12:38 Comment From Tony: Which states are close to fully recovered and which are still lagging behind?

12:40 Jennifer Bradley: The states with the strongest recovery, as of the end of last year, are North Dakota, Michigan, Louisiana, Wyoming, West Virginia, Utah, Indiana, Massachusetts, Alaska, and Oregon.

You see there a mix of natural resources economies, and manufacturing and exports economies (Intel, for example, is a big exporter in the Portland, OR, metro).

12:40 Comment From Beth T: Many politicos see manufacturing as a way for states to emerge from the recession and begin to provide high-paying jobs for their citizens. Given the cheap cost of manufacturing in places like China, is this realistic?

12:43 Jennifer Bradley: My colleagues at Brookings just devoted several hours to this very question at an event this morning! Chinese labor costs are rising, and there are a lot of other factors that make U.S. manufacturing competitive. Job loss in manufacturing is not inevitable. Smart governors understand that manufacturing may not employ as many people as it used it, but it is an important driver of innovation in their states, so they are working to link up university research and manufacturing needs.

12:43 Comment From Abigail: Are there any state programs right now that could and should be scaled up to the federal level?

12:48 Jennifer Bradley: Michigan's governor has proposed a new approach to transportation investments, driven by data—which projects are going to deliver the most bang for the buck, and how do transportation investments support goals beyond just getting from point A to point B (goals like more exports, or supporting logistics hubs)? The federal government could certainly benefit from a more strategic approach to transportation as well.

The larger point though is not necessarily that the Feds should scale-up state interventions willy-nilly, but that they should be taking the same approach, asking "Where are the market failures, and how can we deploy our resources to solve those failures? What needs to be done, and how can we bring a unique solution?"

12:48 Comment From Donna: For a while in the 90s, every state was hoping to have the "next Silicon Valley." What types of industries/sectors are states trying to cultivate today?

12:51 Jennifer Bradley: One promising thing that my colleagues and I see is that states are no longer trying to be "the next" anything—they are trying to be the best versions of themselves and build on strengths that they have. Jed Kolko has done research indicating that 95% of new jobs come from existing firms—that's where smart states are starting, with what they already do well. For some states that's advanced energy, for some it's helping auto supply companies pivot to supplying parts for wind turbines.

12:52 Comment From Fran I: I've heard a lot recently about regional economic development as a tool states are using to support growth. Could you explain a bit more about what these are?

12:55 Jennifer Bradley: It varies from state to state. In New York, for example, Governor Cuomo established 10 regional development councils and asked them to develop strategic plans for their regions. These plans were evaluated by a panel of experts and the top four regions got $100 million in state funding. Colorado's Governor Hickenlooper used a different model. He told each county to create an economic development plan, constructed regional plans from those, and then used that as the state's economic development plan. Tennessee used something called "jobs base camps" to identify key clusters to support.

12:56 Comment From Karen K: How can the federal government encourage states to experiment in these sort of ways?

12:58 Jennifer Bradley: The federal government can listen to the states when they ask for flexibility. For example, governors like Michigan's Gov. Snyder has asked for a different, more flexible approach to spending federal workforce dollars.

Ironically, the federal government is spurring a lot of state innovation right now because it's paralyzed and gridlocked. The states (and metro areas, too) have no choice but to innovate, whether the federal policy environment is conducive to it or not. I certainly don't advocate continued paralysis at the federal level, but it shows that states simply have to get stuff done—they have to balance the budget, they have to respond to unemployment numbers, they have to bridge the gaps.

12:59 Vivyan Tran: Thanks for the questions everyone, see you next week!

Authors

Jennifer Bradley

Image Source: © Max Whittaker / Reuters

Bridges and Roads to a Better Michigan

Bruce Katz and Judith Rodin — Thu, 19 Jan 2012 00:00:00 -0500

In times of fiscal crisis, state and local governments often give infrastructure investments short shrift, based on the assumption that any major expenditure is simply too costly for tight budgets to bear. The trouble with this short-term logic is that it creates much larger expenses in the long run.

Michigan Gov. Rick Snyder’s state infrastructure plan rejects that common approach in favor of targeted data-driven investment in key projects that will support economic growth in the years ahead. Snyder recognizes that safe and efficient transport for both people and freight is essential to the state’s global economic competitiveness. At the same time, he understands that little if any help will be coming from the federal government in the near future. “To meet these challenges, we cannot depend on Washington,” Snyder says. “Investing today not only saves money, but builds the foundation for a reinvented 21st-century Michigan economy.”

Snyder’s “Special Message on Infrastructure” set forth his vision of Michigan as “a global trade center and logistics hub.” Achieving this vision will require large-scale investment, paid for in part through an increase in the state vehicle registration fee. By focusing the state’s limited resources on those parts of the state’s infrastructure that are crucial to economic growth―the most highly trafficked roadways and railways, major ports and airports and the border crossing between Michigan and Canada―this infrastructure plan will work to secure the greatest positive effect on the state’s economy.

The New International Trade Crossing (NITC) linking Detroit and Windsor, Ont. is a key component of Snyder’s proposed infrastructure plan. This crossing represents the busiest commercial border connecting the United States and its largest trade partner, Canada. Roughly 10,000 vehicles cross the border each day, along with 25 to 30 percent of all goods traded between the U.S. and Canada. The existing Ambassador Bridge, completed just weeks after the 1929 stock market crash, is proving unable to meet growing demand, and as Michigan’s economy recovers from the Great Recession, traffic―and expensive delays―will only increase.

Construction of the NITC, financed by a public-private partnership of the U.S. and Canadian governments and private investors, will strengthen cross-border trade relationships by speeding the exchange of goods between these two countries. As Snyder says, “Reinventing Michigan to become a center of global trade requires developing an infrastructure that will meet the modern day demands of the international economy. The people of Michigan are counting on us to put them back to work. This bridge provides an unprecedented opportunity to do that.”

Authors

Bruce Katz
Judith Rodin

Publication: The Atlantic Cities

The Government as a Spark Plug for Innovation

Jennifer Bradley — Thu, 11 Aug 2011 00:00:00 -0400

When he visits a battery plant in Holland, Michigan, today, President Obama will talk about the connection between innovation, advanced manufacturing, and economic growth. But he has an opportunity to make an even more important connection: between government action and innovation.

At a time when the federal government seems unable to manage anything well, and state governments are still grappling with budget shortfalls and crippling layoffs, it is easy to forget that the public sector is a critical driver of innovation, particularly in the energy sector. As James Duderstadt, Mark Muro, and others have pointed out, there are several market failures that cause private energy companies to systematically underinvest in innovation. One in particular stands out:

“Social benefits accrue from the knowledge created by innovative activity, which is added to the public domain once created and is hard for firms to control. Other firms may make use of this knowledge and reap the rewards, encouraging free-riding behavior where firms fail to invest and wait for other firms to finance the knowledge base.”

Venture capital, which is often a source of funding for emerging technologies, also is riddled with its own kinds of market failures. This analysis of venture capital investing in the Great Lakes region (which I’ve written about before) explains it’s not efficient for venture capitalists to track down every possible good opportunity in their sector. Instead, they maximize their chances of finding good investments by focusing on where they’ve been successful in the past, where most deals come from, and, honestly, where they can get to easily. That helps explain why California and Massachusetts get such a huge amount of VC investment, and why places like Holland, Michigan, often get overlooked.

One of the reasons governments exist is to overcome these kinds of market failures. Like roads, weapons systems, and public education, innovation is a public good, something that the public sector has to provide at an optimal level.

Thus, the Recovery Act allocated $2 billion to advanced battery technologies. Under Governor Jennifer Granholm, the state of Michigan also poured $1.38 billion into advanced battery research, as part of its efforts to help the auto industry in the state re-orient itself after decades of crushing job losses.

As the state and federal governments are looking for more and deeper cuts, the public seems to understand that some things are worth investing in. Last year, Ohio voters approved a $700 million bond issue to preserve the Third Frontier, the state’s program to invest in new technologies and their commercialization. This is an encouraging piece of evidence that voters understand the difference between debt or spending that lays the foundation for future growth, and that which does not make sense during a fiscal crisis.

Of course, having just agreed to cut $2.4 trillion from the federal budget over the next 10 years, Obama isn’t likely to call for the kind of federal spending on innovation that’s actually needed. And even if he did, there’s little chance Congress would agree. While Obama’s budget submissions for the last two years have proposed increasing key energy innovation spending, Congress has responded with cuts. In FY 2011, the federal energy innovation budget dropped 10 percent compared to the previous year. The House appropriations committee proposed $491 million in additional cuts from the Office of Energy Efficiency and Renewable Energy, which is almost $2 billion below the president’s budget request.

But Obama still can and should make a clear and explicit argument about the value of government spending. Government money can be intelligently applied to do good –good that would not happen otherwise. In the current political environment that’s a radical and counterintuitive statement, but that doesn’t make it any less true.

Authors

Jennifer Bradley

Publication: The Avenue, The New Republic

Image Source: Â© Kevin Lamarque / Reuters

Boosting the Great Lakes International Economy

John C. Austin — Tue, 19 Jul 2011 11:39:00 -0400

The regions on both sides of the Great Lakes international border need to team up to strengthen their highly integrated economies.

That was the conclusion of over 250 public and private leaders from both the United States and Canada recently brought together by Brookings and the University of Toronto Mowat Centre in Detroit-Windsor.

The tone was set by Bruce Katz’s keynote--where he pressed for international metro action to expand exports and encouraged the industrial Great Lakes to seize and lead the low-carbon, clean-tech economy.

Overall, two topics dominated discussion by delegates as ripe for international teamwork.

One was building the 21^st century transportation infrastructure the region needs as a platform for enhanced exports--and in particular building a state-of-the-art span connecting Detroit and Windsor, the world’s highest dollar international trade crossing point. Michigan Senate Majority Leader Randy Richardville, and Canada’s Consul General Roy Norton were pitching hard for the Michigan Legislature to follow Governor Rick Snyder’s call, and vote final approval for the new bridge.

The New International Trade Crossing has been 10 years in the planning, and is strongly backed by business leaders and governments on both sides of the border. It seemed a done-deal when Gov. Snyder announced that Ontario would pay cash-strapped Michigan’s share of the project, and in turn the U.S. Department of Transportation would let the Canadian dollars stand-in as Michigan’s match for federally-funded highway projects across Michigan.

The project keeps being sabotaged by the aging billionaire Mattie Maroun (born 1927), owner of the equally aging Ambassador Bridge (built 1929), fighting hard to keep a monopoly on toll traffic.

Maroun has contributed hundreds of thousands of dollars to Michigan State legislators, and bankrolled groups that are behind dirty tricks that would make Donald Segretti blush, including fake eviction notices at the doors of homeowners near the proposed bridge and patently false TV spots claiming Michigan taxpayers will foot the bill.

Meanwhile the whole $250 billion economic relationship with Canada is at risk, as the tightly wound manufacturing, agricultural, and commerce supply chains are bottlenecked--just at a moment they are poised to grow.

Another area for Great Lakes international teamwork is converting the region’s prodigious innovation, technology-base, and manufacturing talent to support new jobs and leadership in the clean-technology market. Recent Brookings research shows Michigan already 12^th in the nation in share of clean-tech jobs and confirmed the jobs potential of clean-tech growth.

Grand Rapids Mayor George Heartwell made the point, “I can think of nothing more important than a more robust, and better harmonized Great Lakes renewable energy portfolio standard to drive job creation in the clean energy sector.”

Heartwell was articulating the market opportunities seen by business leaders in West Michigan, who feel well positioned to grow product lines and new jobs developing and manufacturing clean-energy and clean water solutions. When Gov. Snyder showed up in West Michigan to give his first “Reinvent Michigan Award” to Energetx, a wind turbine and electric vehicle parts supplier, the former venture capitalist was also petitioned by a 40-member delegation of clean energy business buddies, asking him to better support these emerging markets with more aggressive public policy.

As the Brookings study shows, clean-tech is one emerging arena in which to repurpose the engineering and manufacturing competencies of the Great Lakes to replace jobs lost in auto and other sectors--if state and metro leaders provide the supportive policy platform.

Authors

John C. Austin

Publication: The Avenue, The New Republic

For a Richer State, Add Investments Into Budget

John C. Austin — Sat, 26 Feb 2011 00:00:00 -0500

Gov. Rick Snyder's budget seeks to find the bottom of Michigan's fiscal freefall by creating a simpler, fairer tax system, forcing action on long-standing legacy cost structures, and signaling that Michigan has a good business climate. He also proposes to tax retirement income like other income, rightly noting that a robust Michigan economy is more about making sure our children and grandchildren have a state in which they want to live, work and make their entrepreneurial careers than whether Michigan is a Cayman Island for retirees.

Yes, there is much to admire in Gov. Snyder's budget. But a good business climate and low taxes do not necessarily a richer state make.

Evidence is overwhelming that the richest states, with growing per capita income, are the ones that are the best educated. Eight of the 10 highest per capita income states have the highest education attainment rates.

Michigan is not one of these states, ranking 37th in per capita income and 34th in education attainment. On balance, "winning states" also invest more in education, infrastructure, research and development, cities and their natural assets.

Austin, Texas, is today the nation's best-performing metro economy. Why? Texas has poured billions of its oil money into making the University of Texas a world-class institution -- with all the "spillovers" for new firms, and creating a dynamic, creative community vibe that attracts yet more talented people.

Look, too, at North Carolina and its Research Triangle. Public-private partnerships and shared investment in education and higher education brought North Carolina into the front ranks of new economy states.

Ditto Pittsburgh, where, like Detroit, a dominant industry, steel, was a middle class job generator. It tanked in the '70s and '80s. Incomes in Pittsburgh plummeted. Thousands, young and old, fled the region.

Today, Pittsburgh's incomes are soaring, and young people are returning. Why? They built out Carnegie-Mellon and the University of Pittsburgh with new medical, life sciences, clean energy and IT firms, and spruced up their special "river city" location.

Michigan has similar assets: World-leading universities. Historic cities and towns. A beautiful outdoors, water and the Great Lakes. And great, hard-working people.

These assets ultimately matter more to job creation than business climate.

What have we been doing to these assets in Michigan? In recent years, Michigan is last among the states in its support for higher education, pricing these great schools out of reach of working-class Michiganders. We've cut support for roads, bridges and infrastructure. Revenue sharing to cities and towns has been slashed. Capital expenditure on Michigan parks has plummeted.

The governor's 2012 budget proposal, while hinting at better things to come, continues these trends.

Low taxes alone do not make states prosper. Even before the governor's proposed changes take effect, the Tax Foundation 2011 Business Climate index rated Michigan 17th in the country in business climate. Minnesota -- the most prosperous Great Lakes state, with more job creation and higher incomes than Michigan -- is 43rd in the same ranking.

Reliable studies suggest that investments in early childhood education yield $2 in long-term economic impact for every dollar invested. Ditto for expenditurers on transportation infrastructure and Great Lakes cleanup. Every dollar dedicated to getting a higher education degree versus a high school diploma nearly doubles lifetime earnings -- and taxpaying.

How do we pay for these investments? Notably lacking from the governor's "fairer, more efficient tax system" is taxing the law firms, the doctor's partnerships, the insurance agencies and the consultants that constitute the bulk of today's knowledge services economy. Shouldn't they contribute, too?

We need a good business climate, for sure. We also need, even more, investment in the things that make Michigan's economy grow.

Authors

John C. Austin

Publication: Detroit Free Press

Will Full Employment Ever Return to Detroit?

Howard Wial — Thu, 20 Jan 2011 09:03:00 -0500

Just after the Labor Department announced that the national unemployment rate had fallen from 9.8 percent in November to 9.4 percent in December, Federal Reserve Chairman Ben Bernanke recently told the Senate Budget Committee that “[i]t could take four to five more years for the job market to normalize fully.”

For the nation as a whole, that seems reasonable. Suppose the labor force grows at the same rate it has over the last decade, an average of 0.07 percent per month. Suppose that the number of employed people (as measured in the Labor Department’s household survey, which is what’s used to figure the unemployment rate) increases by 297,000 every month, as it did in December. Then the nation’s unemployment rate will be just below 4 percent—a rate last achieved in 2000 and one that federal law sets as a target for full employment—in September 2014. Of course, if employment grows more slowly, then it will take longer for the nation to reach full employment.

But what will happen in metropolitan areas with unemployment rates far above the national average? Metropolitan Detroit, for example, had an unemployment rate of 13.5 percent in November (the most recent month for which metro unemployment rates are available). To many people in Detroit, full employment seems like a distant, perhaps unattainable dream. Even if Detroit’s unemployment rate falls as rapidly as the national rate, it will take until at least mid-2016 for its unemployment rate to reach 4 percent.

Surprisingly, though, Detroit’s unemployment rate will probably fall faster than that. The reason is that, faced with continued poor job prospects, many people will leave. That will reduce the size of Detroit’s labor force and lower its unemployment rate, even if job creation remains sluggish. In contrast, relatively few people leave the United States even during the worst economic times, and not very many drop out of the labor force because they can’t find work. (Since the beginning of the Great Recession in December 2007, the U.S. labor force fell by an average of only 0.008 percent per month.)

What’s likely to happen in Detroit? The metro area’s labor force has fallen by an average of 0.07 percent per month since the beginning of 2000, largely because the metro area’s population has declined. (The labor force fell at a slightly slower rate since the beginning of the Great Recession, perhaps because people who would otherwise have left the region couldn’t sell their houses.) Suppose that rate of labor force decline continues, and that the metro area’s employment rises by 2,164 every month, as it did in November. (That’s a slower job growth rate than the one I assumed for the nation as a whole.) Then the metro area’s unemployment rate will be just under 4 percent in July 2015--about a year sooner than it would reach that target if it fell in proportion to the national rate.

Even if employment grows more slowly than I’ve assumed (so that full employment takes longer to achieve), the moral of the story is clear. As economists Olivier Blanchard and Larry Katz pointed out almost 20 years ago, unemployment rates even out more quickly at the regional level than at the national level. People leave economically depressed regions and move to ones that are adding jobs rapidly. That lowers the unemployment rate in the depressed regions and raises it in the more vibrant ones. So it could take metro Detroit less than a year longer than the nation as a whole to return to something like full employment, even though its unemployment rate is now much higher than the nation’s.

Authors

Howard Wial

Publication: The Avenue, The New Republic

Image Source: © Rebecca Cook / Reuters

Drilling for Oil in the Great Lakes

John C. Austin — Thu, 10 Jun 2010 15:36:00 -0400

One of the annual Great Lakes political rites of late spring is the leadership policy conference on scenic Mackinac Island, the car-less Great Lakes getaway, at which Mackinac’s Grand Hotel, with the longest front porch in the world, is weighed down by 1500 of Detroit and Michigan’s leading business, media, and political figures, along with the odd early presidential aspirant.

This being an election year, the manure being spread by seven Republican and Democratic Michigan gubernatorial hopefuls, along with visiting keynoter and maybe presidential candidate Newt Gingrich, rivaled the piles left by Mackinac’s famous horse-drawn taxis.

An unprecedented (and unlikely to be repeated) bi-partisan gubernatorial debate hosted by the Detroit Regional Chamber of Commerce saw seven Michigan candidates to replace term-limited (and sand-blasted by Michigan’s auto and economic collapse) Governor Jennifer Granholm deal with a host of hot-button topics.

None was more interesting, given the BP moment, than the question posed by moderator Tim Skupick: “If the Canadians were to start drilling for oil in the Great Lakes, would you try to stop it, and if so, how?”

The question was not a wild hypothetical. Canadian provinces have been considering exploiting more of the significant gas and oil deposits under the Great Lakes. Drilling has been done on land for years. Drilling in the Lakes has been episodically proposed by various states, and most recently, Canadian provinces. Michigan’s legislature was moved in 2002 to ban Great Lakes drilling, and pushed a federal law in 2005, as proposals for “slant drilling”—getting at oil and gas under Michigan proper—from “out at sea” in the Great Lakes were seriously being pursued.

Michigan straddles almost 4,000 of the 10,000 miles of Great Lakes frontage; but eight other states and two Canadian provinces—including leading metros like Chicago, Milwaukee, Buffalo, Cleveland, and Toronto to smaller Duluth, Green Bay, and Traverse City—share the same waterfront real estate.

Given the Gulf-induced drilling backlash—all the candidates—Republicans and Democrats—groped to outdo each other in demonstrating their zeal to prevent such a thing with varying degrees of credibility given Canada is a sovereign nation and a lack of clarity concerning what, if anything, a governor could do.

Some of the answers: “I’d fly to Ottawa; I’d phone the premier of Quebec; I’d lobby the Obama administration to stop it; a governor can’t do anything, but I’d try.”

At a moment when the nation is just beginning to pour serious dollars into cleaning the Great Lakes, repairing damage done by the prior carbon-fueled industrial era’s water abuse; and prompted in no small part by our work demonstrating the huge economic importance of clean Great Lakes to the long-term economic revitalization of these industrial metros, there have been some ironic recent twists in the political winds.

Prior to the Gulf BP disaster, not only was Great Lakes drilling once again sneaking up as a real and potentially “needed” economic opportunity (albeit with Canadians as the stalking horse), but Michigan just gained an unprecedented windfall to maintain its once crown jewel state parks system from the latest round of oil and gas leases that are routinely auctioned. Michigan’s park system, like a lot of Michigan, has been decimated by 10 years of economic and state budget collapse, leading to deferred maintenance and park budget cuts. The recent round of land-based oil and gas exploration leases earned a surprise $178 million for the parks trust fund—almost as much as the $190 million total netted since the program began in 1929.

Making a choice in the Great Lakes devil’s bargain between long-term economic gain by capitalizing on its spectacular freshwater coast as a place-defining, people attracting magnet or exploiting the rich resources that lie below the Great Lakes, and maybe wrecking the place again, will be held at bay due to the BP moment. But the underlying tensions and Faustian political choice remains.

Authors

John C. Austin

Publication: The Avenue, The New Republic

Image Source: © Reuters Photographer / Reuters

Financial Excess Still Claiming Car Country Casualties

John C. Austin — Fri, 21 May 2010 13:42:00 -0400

In Michael Lewis’ disturbing but illuminating book unearthing the machinations behind the global financial crisis, The Big Short, one of the Wall Street investors enmeshed in creating the web of sub-prime mortgage-backed securities and related derivatives reports on how he knew the bubble was going to burst. It was when he (somehow!!) learned from a Las Vegas prostitute that she owned five homes, financed with sub-prime ARMs, ready to implode.

As Washington (hopefully) gets financial reform done to restrain the “animal spirits” (to borrow one of Alan Greenspan’s favorite phrases) of investors and borrowers alike, I was reminded of the economic havoc wreaked by this orgy of incestuous investing at a summit sponsored by Brookings and the Obama administration on the future of auto-impacted communities.

Local mayors, business, labor leaders, civic, and philanthropic leaders—along with governors and members of Congress from auto communities—took stock of the damage, their own and the administration’s efforts to repair it, and what needs to be done next to aid the metros of auto country to accelerate their recovery.

To say the hard-hit auto communities of Michigan, Ohio, Indiana and the rest of the industrial Midwest did less financial sleeping around than the real estate bubble communities of Vegas, Florida, and the coasts is an understatement. The workers in these communities were too busy furiously trying to retool their own skills and industries in the face of job loss and restructuring in autos and manufacturing than to try and finance five homes with bad loans. Then the global financial crisis hit them with a second punch to the gut—effectively destroying credit-dependent markets for the things they made (autos and the expensive parts that go into them).

The biggest tragedy is that these Wall Streets “markets” for synthetic mortgage-backed securities and credit-default swaps had absolutely nothing to do with what we want financial markets to do well—put money efficiently into economic growth generating investment: plants, equipment, new technologies, new goods and services. When credit markets “froze” thanks to the collapse of these financial “products”—it put a deep-freeze on the work of those in auto communities—trying to make and invent new real products.

At the summit I talked Sue Osborne, the mayor of my former hometown of Fenton, Michigan, a solidly blue collar bedroom community 15 miles south of Flint—a community which should be cheered by the announcement of a new federal plan to help clean up 90 former GM industrial sites, and position them for new development; including the massive and iconic Buick City complex in Flint.

Meanwhile though, auto suppliers and auto-related firms are still reeling from the effective freeze on lending by banks to anything auto-related—even to finance their move to clean energy components, medical devices, or other new product lines. Mayor Osborne told me Creative Foam, a Fenton auto supply firm, and a leading corporate citizen of 40 years, can’t get the loans to finance their retooling to make non-auto products—and was at risk of going out of business.

Larry Summers, head of the National Economic Council, noted in his remarks that loosening credit is one of the basic building blocks for a manufacturing revival and reiterated a call for Congress to pass a proposal modeled on a Michigan program to provide loan guarantees for manufacturers looking to diversify their product lines.

On the ground in Fenton, Flint, Kokomo, and Mansfield and the other communities represented at the summit the economic survival clock is ticking, like a real-life version of “24.” Let’s hope we can see more action, and a happy ending.

Authors

John C. Austin

Publication: The Avenue, The New Republic

Auto Communities and the Next Economy: Partnerships in Innovation

Tue, 18 May 2010 08:30:00 -0400

Event Information

May 18, 2010
8:30 AM - 4:45 PM EDT

Hyatt Regency Washington on Capitol Hill
400 New Jersey Avenue, NW
Washington, DC

As the automotive industry goes through a transitional period, the communities that were shaped by the once-thriving sector must change as well. On May 18, a summit featuring discussions among key federal, state and local leaders addressed the decline in auto communities and the tools needed to bring them into the next economy.

The event was co-sponsored by the White House Council on Automotive Communities and Workers, the United States Department of Labor, and the Funders' Network for Smart Growth and Livable Communities.

Leaders from several auto-dependent cities and regions described their innovative strategies and partnerships to address community economic change, and opened up discussion with audience members about implementation and opportunities for new partnerships and federal reform. Speakers included Bruce Katz, Ford Foundation President Luis Ubiñas, and the co-chairs of the White House Council on Automotive Communities and Workers, Lawrence Summers and Department of Labor Secretary Hilda Solis. The administration announced a new initiative to help fund the restoration of declining manufacturing properties as a part of General Motors' restructuring—an idea echoed in Alan Mallach’s “Facing the Urban Challenge” paper released at the event.

Sessions focused on related aspects of economic transformation: reinventing industries, retraining workers, cleaning up contamination and blight, and creating new uses for underutilized land.

One particular panel focused on Detroit, the traditional center of the auto industry. Leaders discussed a holistic approach to reinventing a major auto city, from helping auto manufacturers and suppliers transition to new products to physically transforming a central city that has lost over half of its population during the last 50 years. Driving the vision are powerful partnerships with philanthropic and other community leaders.

Remarks from Bruce Katz »
Remarks from NEC Director Lawrence Summers »
Remarks from Ford Foundation President Luis Ubiñas »
Ford Foundation Announces Commitment to Urban Prosperity »

Click on any image below to view a larger version

Dr. Lawrence Summers
Director, National Economic Council

Bruce Katz—Vice President and Director,
Metropolitan Policy Program at Brookings

From left: The Honorable Carl Levin (D-MI);
The Honorable Sandy Levin (D-MI);
The Honorable Jennifer Granholm (D-MI);
The Honorable Hilda Solis—Secretary
United States Department of Labor;
Ronald Gettelfinger—President
United Auto Workers;
Fred Keller—Chairman and CEO
Cascade Engineering

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The Political Geography of Ohio, Michigan, and Missouri: Battlegrounds in the Heartland

William H. Frey and Ruy Teixeira — Fri, 10 Oct 2008 12:00:00 -0400

This is the third in a series of reports on the demographic and political dynamics under way in key “battleground” states, deemed to be crucial in deciding the 2008 election. As part of the Metropolitan Policy Program’s Blueprint for American Prosperity, this series will provide an electoral component to the initiative’s analysis of and prescriptions for bolstering the health and vitality of America’s metropolitan areas, the engines of the U.S. economy. This report focuses on three major battleground states in the Midwest—Ohio, Michigan, and Missouri—and finds that:

Ohio, Michigan and Missouri all feature eligible voter populations dominated by white working class voters. However, this profile is changing, albeit more slowly than in faster-growing states like Colorado or Arizona, as the white working class declines and white college graduates and minorities, especially Hispanics, increase. The largest effects are in these states’ major metropolitan areas— Cleveland, Columbus, and Cincinnati in Ohio: Detroit in Michigan; and St. Louis and Kansas City in Missouri— especially in their suburbs.

In Ohio, these trends could have their strongest impact in the fast-growing and Democratic-trending Columbus metro, where Democrats will seek to tip the entire metro in their favor by expanding their margin in Franklin County and reducing their deficit in the suburbs. The trends could also have big impacts in the Cleveland metro (especially its suburbs), in the Cincinnati metro (especially Hamilton County) and in the mediumsized metros of the Northeast (Akron, Canton, and Youngstown). Overall, the GOP will be looking to maintain their support among the declining white working class, especially among whites with some college, who have been trending Democratic. Also critical to their prospects is whether the growing white college-educated group will continue its movement toward the Democrats.

In Michigan, these trends will likely determine whether the fast-growing and populous Detroit suburbs continue shifting toward the Democrats, a development which would tip the Detroit metro (44 percent of the statewide vote) even farther in the direction of the Democrats. The trends will also have a big impact on whether the GOP can continue their hold on the conservative and growing Southwest region of the state that includes the Grand Rapids metro. The GOP will seek to increase its support among white college graduates, who gave the GOP relatively strong support in 2004, but have been trending toward the Democrats long term.

In Missouri, these trends will have their strongest impact on the two big metros of Democratic-trending St. Louis (38 percent of the vote)—especially its suburbs— and GOP-trending Kansas City (20 percent of the statewide vote). The Democrats need a large increase in their margins out of these two metros to have a chance of taking the state, while the GOP simply needs to hold the line. The trends will also have a significant impact on the conservative and growing Southwest region, the bulwark of GOP support in the state, where the Republicans will look to generate even higher support levels. The GOP will try to maintain its support from the strongly pro-GOP white college graduate group, which has been increasing its share of voters as it has trended Republican.

These large, modestly growing states in the heartland of the United States will play a pivotal roll in November’s election. Though experiencing smaller demographic shifts than many other states, they are each changing in ways that underscore the contested status of their combined 48 Electoral College votes in this year’s presidential contest.

Table Of Contents:
Executive Summary »
Introduction and Data Sources and Definitions »
Ohio »
Michigan »
Missouri »
Endnotes »

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The Political Geography of Virginia and Florida: Bookends of the New South

William H. Frey and Ruy Teixeira — Fri, 10 Oct 2008 12:00:00 -0400

This is the fourth in a series of reports on the demographic and political dynamics under way in key “battleground” states, deemed to be crucial in deciding the 2008 election. As part of the Metropolitan Policy Program’s Blueprint for American Prosperity, this series will provide an electoral component to the initiative’s analysis of, and prescriptions for, bolstering the health and vitality of America’s metropolitan areas, the engines of the U.S. economy. This report focuses on two major battleground states in the South, Virginia and Florida, which serve as bookends to an emerging New South.

Virginia and Florida have eligible voter populations that are rapidly changing. White working class voters are declining sharply while white college graduates are growing and minorities, especially Hispanics and Asians, are growing even faster. These changes are having their largest effects in these states’ major metropolitan areas, particularly Miami and rapidly-growing Orlando and Tampa in Florida’s I-4 Corridor and the suburbs of Washington, D.C. in Northern Virginia. Other large metro areas in these states are also feeling significant effects from these changes and will contribute to potentially large demographically related political shifts in the next election.

In Virginia, these trends will have their strongest impact in the fast-growing and Democratic-trending Northern Virginia area, where Democrats will seek to increase their modest margin from the 2004 election. The trends could also have big impacts in the Richmond and Virginia Beach metros, where Democrats will need to compress their 2004 deficits. Overall, the GOP will be looking to maintain their very strong support among Virginia’s declining white working class, especially in the conservative South and West region. The Democrats will be reaching out to the growing white college graduate group, critical to their prospects in Northern Virginia and statewide. The Democrats will also be relying on the increasing number of minority voters, who could help them not just in Northern Virginia, but also in the Virginia Beach metro and the Richmond and East region.

In Florida, these trends will have their strongest impacts in the fast-growing I-4 Corridor (36 percent of the statewide vote), which, while Democratic2 trending, is still the key swing region in Florida, and in the Miami metro, largest in the state and home to 27 percent of the vote. The trends could also have big impacts in the South and North, where Democrats will be looking to reduce their 2004 deficits in important metros like Jacksonville (North) and Sarasota and Cape Coral (South). Across the state, the GOP needs to prevent any erosion of support among white working class voters, especially among Democratic-trending whites with some college. They will also seek to hold the line among white college graduates, whose support levels for the GOP are high but declining over time. Finally, the support of the growing Hispanic population is critical to GOP efforts to hold the state, but this group is changing generationally and in terms of mix (more non-Cuban Hispanics), which could open the door to the Democrats.

Both of these states are near the top of the lists of most analysts’ list of battleground states for November 2008. Florida was a very closely contested state in both 2000 and 2004 (especially 2000). But Virginia’s status as a battleground is new to 2008. Yet in both states the contested political terrain reflects the dynamic demographic changes occurring within them. With 27 and 13 electoral votes, respectively, all eyes will be on Florida and Virginia on election night.

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The Political Geography of America’s Purple States: Five Trends That Will Decide the 2008 Election

Fri, 10 Oct 2008 08:00:00 -0400

Event Information

October 10, 2008
8:00 AM - 10:00 AM EDT

First Amendment Lounge
National Press Club
529 14th St. NW, 13th Floor
Washington, DC

The Metropolitan Policy Program at Brookings, hosted The Political Geography of America's Purple States: Five Trends That Will Decide the 2008 Election, a briefing on a new series of reports on the political demography of "purple" states in the 2008 election.

Purple states-or states where the current balance of political forces does not decisively favor one party or the other-will play an undeniably pivotal role in the upcoming election and include: Virginia and Florida in the South; the Intermountain West states of Colorado, New Mexico, Nevada, and Arizona; Michigan, Missouri, and Ohio in the Heartland; and Pennsylvania.

On October 10, 2008 at the National Press Club in Washington DC, authors William Frey and Ruy Teixeira highlighted the political and demographic trends in these 10 battleground states, focusing not only on their role in the 2008 election, but their position as toss-ups in years to come.

The session opened with an overview of the demographic shifts shaping all the contested states studied, and evolved into a detailed presentation of the trends that are testing and reshaping the balance of their voting populations, focusing particularly on five trends that Frey and Teixeira believe will decide the 2008 election. Feedback from James Barnes, political correspondent for the National Journal, helped shape the conversation.

Event Materials

Participants

Panelists

James Barnes

Political Correspondent, National Journal

The Climate of Opinion: State Views on Climate Change and Policy Options

Christopher P. Borick and Barry Rabe — Tue, 16 Sep 2008 12:00:00 -0400

Executive Summary

The 2008 presidential race may be the first in which the candidates’ positions on climate change have some influence on electoral outcome. Barack Obama and John McCain have already carved out policy proposals, reflecting the growing saliency of climate change issues among voters on the left and right. While the 110th Congress will likely adjourn with little done on the environment, legislators—trying to position themselves and their committees for lead roles in the next Congress—will ultimately have to respond to the growing number of Americans concerned about global warming. However, the next U.S. president and Congress, as in previous years, will likely struggle to formulate a response.

Ironically, at a time when federal institutions are giving expanded attention to the issue, state governments have already taken a lead role in most areas of American climate policy development. State policy responses include mandating increases in energy from renewable sources, reducing carbon emissions from vehicles, and developing cap-and-trade policies to reduce greenhouse gas emissions from utilities and major manufacturers. Therefore, any future federal policy has the opportunity to learn from real state experience, including public receptivity to policy.

A good deal of research has attempted to discern the public’s views on climate change, which was reviewed in an earlier Issues in Governance Studies paper. But much of the existing analysis has focused on national samples and averages, and does not take into account state or regional variation. Nor has it weighed federalism concerns, namely support for federal as opposed to state-based policy strategies.

Based upon a telephone survey conducted in late 2007, this paper examines public attitudes towards climate change, with particular emphasis on policy options, in Michigan and Pennsylvania—two states deemed major battlegrounds for McCain and Obama.

In addition to looking to states for possible policy solutions, Washington must also confront several questions, including how to design and implement policies with states that have very different levels of capacity and patterns of emissions growth. It must also contend with a blizzard of demands for special treatment from key interests, ranging from established vehicle manufacturers to entrepreneurial proponents of new technologies designed to save energy. All this will likely unfold amid concern over spikes in energy prices, including gasoline, which could be further influenced by new climate initiatives. As a result, there is no guarantee of federal action at any point in the near future, leaving the possibility of continuing state domination of this policy area for some time to come.

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Christopher P. Borick
Barry Rabe

A Reason to Believe: Examining the Factors that Determine Americans’ Views on Global Warming

Christopher P. Borick and Barry Rabe — Thu, 31 Jul 2008 12:00:00 -0400

Executive Summary

During the past two years, public perceptions of global warming have shifted significantly in the United States. A number of 2007 national surveys reveal that Americans increasingly acknowledge global warming’s existence and believe anthropogenic factors are its cause. Another national survey in spring 2008 shows that the number of Americans who believe that there is significant evidence of global warming may have declined. These shifts in public opinion have been widely discussed in the media and academia, but little is actually known about what drives individual views on global warming. Do personal experiences impact views (e.g. hotter temperatures in their state)? Does existing evidence presented in national media (e.g. melting glaciers), scientific projections (e.g. computer modeling), dramatic experiences (e.g. disastrous hurricanes or award-winning films), or some combination of these factors influence public beliefs?

This report, the first of a two-part series, seeks to measure the relative impact of an array of factors on individual perceptions of global warming. Results from a telephone survey of 1,500 individuals in multiple states indicate that individual experiences and existing evidence influence belief in global warming more than scientific projections or single event occurrences such as Hurricane Katrina. Numerous individual characteristics (e.g. partisan affiliation, gender, age) also affect belief in global warming A later report, which draws from this survey analysis, will examine public receptivity to a range of policy options available to policymakers at both federal and state levels.

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Christopher P. Borick
Barry Rabe

The End Game in the Democratic Presidential Nominating Contest

Thomas E. Mann — Thu, 29 May 2008 12:00:00 -0400

While the Puerto Rico, Montana and South Dakota primaries will complete the formal Democratic delegate selection process next Tuesday, June 3, the major remaining event will be held this Saturday in a Washington hotel. The Rules and Bylaws Committee of the Democratic National Committee will meet to respond to petitions filed by Florida and Michigan Democrats to seat their delegations sanctioned for violating the timing provisions of party rules. How the committee resolves the seating of these state delegations and, just as importantly, how Hillary Clinton and Barack Obama react to its decision will determine how quickly a presumptive nominee is recognized and how unified Democrats are likely to be in the general election campaign.

In recent weeks Clinton has turned up the heat on the DNC with sharp rhetoric about “counting every vote.” Her supporters and staff now demand a full seating of the two delegations, with delegates allocated in line with the primary results. But votes cast outside the rule of law and in the absence of contested elections lack moral standing and by themselves have no legitimate claim on the selection of delegates to the national party convention. Hence the necessity of a principled but pragmatic accommodation of the various interests is at stake.

From a party perspective, those interests are maintaining the credibility of DNC sanctions, doing no damage to Democratic prospects in Florida and Michigan in the November election, and making it easier to unify the party quickly for the general election campaign.

The solution is crystal clear; the problem is getting all parties to agree to it. Here’s what to do: Seat the full complement of pledged delegates from both states but, like the Republican National Committee sanction on the two states, give each delegate only one-half vote. This is the minimum sanction consistent with party rules. Allocate the delegates from Florida between the candidates based on the primary results. At least all of the candidates were on the ballot, though none campaigned in the state. In Michigan, where Obama and Edwards did not appear on the ballot, use the Clinton vote (55 percent) to allocate delegates to her; then allow Obama and Edwards the right to approve the delegates elected on the uncommitted slate (a procedure embedded in party rules for all pledged delegates), making likely a fair reflection of the presidential preferences of Michigan voters who selected the uncommitted option on the truncated ballot. Retain full votes for the unpledged party leaders and elected officials – the so-called superdelegates – reflecting their status in the party charter and the irrelevance of the state primaries to their standing at the convention, even though many of them were partly responsible for the violation of party rules.

It is hard to see how Clinton could credibly demand more than this very generous accommodation of her interests. With their long history in and commitment to the Democratic Party, it is likely that most Clinton supporters on the Rules and Bylaws Committee would support such a compromise even if their candidate did not. And if Clinton then vowed to take a challenge to the Credentials Committee and the convention, it is likely that many of the superdelegates supporting her candidacy would switch to Obama, joining those still uncommitted, and give him an insuperable delegate advantage. In that case, she would have done nothing to advance her long-shot candidacy but she would have succeeded in diminishing her standing in the party and her party’s prospects in the general election.

Authors

Thomas E. Mann