Brookings: Topics - U.S. States and Territories

Are Public Pensions Keeping Up with the Times?

Richard W. Johnson, Matthew M. Chingos and Grover J. "Russ" Whitehurst — Wed, 12 Jun 2013 09:56:00 -0400

Retirement plans for public employees in the United States face serious challenges: By their own calculations, states and localities are $900 billion short of the funds they need to set aside to pay for benefits they have already promised their employees, write the Urban Institute’s Richard W. Johnson and the Brookings Institution’s Matthew M. Chingos and Grover J. Whitehurst. But the problem is far more serious than currently imagined. What states accountants won’t admit, Chingos, Whitehurst and Johnson argue, is that the funding problem is much worse than states’ calculations show.

The underfunding problem has two key components: First, by their own calculations, most states are not contributing enough to keep up with the pension promises they are making to their employees. Second, states’ calculations seriously understate the extent of the funding problem. Most states assume that they will earn an average rate of return of 8 percent a year on their pension funds, a highly unlikely outcome in the current economic environment. This unrealistic assumption still produces a staggering unfunded liability: $0.9 trillion in 2011. Using a more reasonable assumption of a 5 percent return increases the unfunded liability to $2.7 trillion, these scholars estimate, which implies that the average state has only funded half of its pension promises. A funding gap of $2.7 trillion is more than four times the $607 billion in general outstanding debt on states’ books in 2012, Chingos, Whitehurst and Johnson report.

And many public employee pension systems also have design features that, even if the pensions are properly funded, compromise state and local governments’ ability to attract and retain the best employees, these writers assert. Young workers have little incentive to join the state’s workforce unless they plan to remain on the payroll for at least 25 years. Those who leave their jobs earlier forgo a significant portion of the retirement benefits from their employer. This is because most pension systems provide very steep rewards late in employees’ careers, penalizing those who work for the state for “only” 10 or 20 years. But there is also a problem at the other end of the career ladder, with pension systems punishing employees for staying too long past normal retirement age. This design feature makes it difficult for the state to retain experienced older workers, many of whom have specialized skills and deep institutional knowledge that are difficult to replace.

As debate swirls around how to properly fund public employee benefits, this report assesses the real challenges facing state and local government retirement plans and details the problems facing public employee pension systems across the country. Chingos, Whitehurst and Johnson’s comprehensive examination of the existing research on this topic highlights the many problems facing these pension plans, including the underfunding that threatens states’ economic futures and outdated design features that cripple states’ ability to recruit and retain the best public servants.

In the video below, Chingos and Johnson discuss the issues raised in the paper:

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Are Public Pension Plans Keeping Up With the Times?

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Are Public Pension Plans Keeping Up With the Times?

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Image Source: © Radovan Stoklasa / Reuters

Maryland v. King: An Unfortunate Supreme Court Decision on the Collection of DNA Samples

Richard Lempert — Thu, 06 Jun 2013 11:38:00 -0400

Maryland v. King, the recently decided DNA identification case, has elicited both cheers and jeers. Cheerers see the case as an important weapon in the fight against crime, while jeerers see the case as a serious infringement on privacy and 4^th Amendment freedoms. In this dispute the cheerers probably have the better case, but this is because a debate based mainly on interpretations of the 4th amendment does not get at the core of the issue we should be confronting. Perhaps the most common concern of those appalled at the decision is that collecting DNA samples involves an infringement on privacy that is by orders of magnitude greater than that which accompanies other identification evidence, such as fingerprints and photographs. DNA, they point out, can reveal far more about a person than a photograph or a fingerprint, including perhaps violence proneness and the likelihood of contracting different diseases. This concern is, however, largely groundless. DNA collected to match criminals to crimes includes information about 13 gene segments (alleles) that are part of the non-coding portion of the genome. They reveal no intimate information about their sources, nor are they likely to, and the information stored in a data base describes only these 13 alleles. The concern is not entirely groundless, however, for the Maryland statute at issue in King seems to contemplate that whether or not a DNA sample relates to the crime for which a person was arrested, it will be retained if the person is convicted of that crime. It is hard to see a legitimate reason for this or why a criminal upon conviction should lose this aspect of personal privacy, but the question of whether DNA samples following conviction could be retained and further analyzed was not at issue in this case.

The second concern of those appalled is simply that a search of a still innocent person has occurred without probable cause. The concern is fed by Justice Kennedy’s majority opinion in King which is entirely unconvincing in its attempt to justify DNA collection as an ordinary part of the booking process, much like fingerprinting. The opinion suggests that the primary justification for taking an arrestee’s DNA is to allow the authorities to identify with certainty the person before them and to better assess the care with which he should be guarded or the danger that if released on bail he might flee or pose a threat to society. Justice Scalia in dissent demolishes this rationale, pointing out that fingerprints are a far faster means of identification and, he might have added, far cheaper. Moreover, in King the delay between the time King’s DNA was taken and when results were returned was about 4 months. Such delays are not unusual and mean that the DNA taken from arrestees cannot satisfy the concerns that for the King majority are the main rationales for allowing the search.

Yet it is hard for one who is not a 4^th Amendment purist to get upset about this search. DNA samples are taken by lightly brushing a swab on the inside of a person’s cheek. The time needed is negligible and intrusion could hardly be less. Compared to the disruption of the arrest and searches for weapons or contraband upon arrest, the “search” for DNA is nothing. Indeed it is nothing compared to the inconvenience and intrusion that is no doubt felt by the teenager who is stopped for “informal” questioning, not amounting to a search, on the streets of New York.

The cheerers, on the other hand, are right to see the DNA sampling of arrestees as a tool for crime control, although whether it will prove as valuable as its advocates claim remains to be seen. (Even if a cold case is solved the offender is already under arrest and most likely would have been convicted and sentenced for his most recent crime.) People are identified as criminals when their DNA is typed and matched to DNA taken at a crime scene or from a crime victim, as with semen found on a rape victim. The unsolved crimes in the DNA data base are serious ones and often, as with rape and burglary (where the UK has taken the lead) many offenders repeat their crimes if not caught. Moreover, the number of cold cases being resolved is not negligible. The Kansas Bureau of Investigation reports, for example, that it had 284 cold hits in 2011 using the national registry, including suspects in 13 homicides and 54 rapes, but a large proportion of these hits most likely would have come anyway from samples taken after arrestees were convicted. Still there are definitely crime control returns to taking DNA from arrestees, some future crimes are in all likelihood prevented and as knowledge of data base searches permeates society perhaps there will be deterrent effects as well.

But these virtues of DNA testing are beside the point, or at least they should be. The issue the Court barely touched on and never dealt with adequately is whether states are justified in singling out still innocent defendants for DNA testing and sparing the rest of us. If everyone’s DNA were tested, say at birth, and kept on file, even more DNA identifications would be made; more criminals would be locked away before they could offend again, and deterrence would be greater. Except by fiat it is hard even to argue for the generally accepted position that those convicted of crimes have forfeited their right to keep the information in their DNA to themselves. It is far harder to argue that those who have been selected by the police to be arrested have, before they are convicted, forfeited this right. Not only are arrestees presumed innocent, but many are in fact innocent of the offense that led to their arrest. In investigating a crime the police may arrest and release several suspects before they identify the true perpetrator, and many of those arrested are never tried or if tried are not convicted.

The difficulty of justifying King is still greater when one considers that the police do not arrest innocent people at random. Minorities appear particularly vulnerable. A just released study is instructive. It suggests that even though similar proportions of whites and blacks use marijuana, a black person is about 4 times as likely to be arrested for marijuana possession as a white person, and in some places the disparity is several times as great. This means that blacks who have not committed the crime leading to their arrest are at greater risk than similarly innocent whites of being linked to another crime through DNA profiling. It is, in addition, not just those arrested who are especially vulnerable. If an arrestee’s DNA is the same on most but not all alleles to the DNA in a data base, there is a good chance, amounting often to almost a certainty, that a relative of the arrestee left the crime scene DNA. Moreover, we are not just talking about brothers and sons; the net can be cast very wide. In one UK case, the police compiled a list of 700 people who might have been the source of crime scene DNA that almost but not quite matched the DNA of the initial suspect. Based on considerations like age, gender and residence, they winnowed the list of relatives down to develop a manageable group for further investigation, and they eventually identified the perpetrator. Thus people who have never done anything to justify having their DNA typed are effectively in the DNA data base, and racial disparities in the likelihood of arrest will be reflected in the degree to which never-arrested members of different ethnic groups are vulnerable to DNA identification. The Maryland law at issue in King recognizes these problems. It allows DNA to be collected only from those arrested for serious crimes, and it does not allow familial searching. Other states are not so restrictive, however, and many in the criminal justice system are pushing for more use of near match identifications. The Court’s decision in King can be expected to spur movement in this direction.

What , one might ask, is so bad about using DNA samples taken from arrestees to identify people guilty of unsolved crimes? If an arrestee is found guilty of the crime that led to his arrest, it matters little whether his DNA is typed and compared to unsolved crime DNA before or after conviction. If he is not charged with or convicted of the crime leading to arrest, then but for the DNA typing he would continue to thwart justice for a crime he did commit, surely not a desirable outcome. Even the relative who is discovered by a near match is hardly an object of sympathy. He too is most likely to have not only committed a serious crime but also to have evaded capture for it. From a just deserts perspective nothing seems wrong. Those who have escaped justice now find they must pay the price for their crimes. From a distributive justice perspective the situation is, to be sure, more troubling, for it exacerbates the degree to which some minorities are more likely than similarly criminal whites to be arrested for their crimes. Still the cure should be to arrest more white criminals and not to let other who have committed crimes go free. Moreover, since much crime is intraracial those saved from future rapes or killings will often have the same heritage as those captured.

If there is an argument against more widespread DNA typing, it relates to the surveillance society we are building and when the 4^th Amendment will protect against this. Do we want to allow DNA to be taken when no crime is suspected if by doing this we will catch more rapists and murderers? The answer is unclear. We are, after all, a society that tolerates thousands of preventable gun deaths, many of which are criminal, in the name of individual freedom. Some like Justice Scalia will argue that regardless of results, suspicionless searches, even ones as minimally intrusive as a DNA cheek swab, offend our human dignity and violate the Constitution. Others will feel that the infringement on privacy and autonomy is minimal and that catching more rapists and murderers and deterring others makes the trade-off between dignitary interests and crime control more than worth it. It is the dispute between these two positions that we should as a society be deciding.

The problem with the King case is that it distorts our judgment of the values at stake. Psychologically when we think about the issues King raises, we are deciding for “the other.” Alonzo King was, after, all arrested for and found guilty of a serious violent crime. He is not like us. Thinking of King, it is easy to strike the balance in favor of crime control over 4^th Amendment rights and human dignity, for he certainly does not exemplify the latter. Yet Alonzo King, at the time his DNA taken, was in all legally relevant respects like us in his innocence. We should judge the result in King not with Alonzo King in mind but with ourselves, our friends and neighbors standing in his place. Some through near match searching are, unknowingly, already there. Others could be, for King is precedent for establishing a national DNA database since it is hard to imagine any principled distinction between King while he stands unconvicted and ourselves. (The only salient difference, that an arrest requires probable cause, is too thin a reed for any but the most cynical to rest upon.) It is in the context of establishing a national data base, to include our own, that we should consider the desirability of King. Reasonable people can differ. Some would be willing if not eager to have their DNA in a data base if that would deter crime and mean that more who were not deterred were caught. Others would side with Justice Scalia who wrote, “Perhaps the construction of such a genetic panopticon is wise. But I doubt that the proud men who wrote the charter of our liberties would have been so eager to open their mouths for royal inspection.” What is most wrong with the Court’s decision in King is not that it reached a bad result, but that it forestalls the debate we should be having.

Authors

Richard Lempert

Image Source: © Bobby Yip / Reuters

Recurring Disasters: Are We Learning Lessons?

Elizabeth Ferris — Wed, 10 Apr 2013 08:00:00 -0400

For the past three years, we’ve compiled an annual review of natural disasters, highlighting not only overall trends for the year but drawing out lessons to prepare for future disasters. Given the fact that the frequency, intensity and unpredictability of natural disasters is expected to increase as a result of climate change, it is more important than ever that we learn from the past.

In looking back at 2012, we were struck by the ‘recurring disasters’ which occurred in different parts of the world. Hurricane Irene hit the northeastern United States in 2011 and then a little over a year later, Hurricane Sandy hit the same area. Typhoon Washi/Sendong in the Philippines was followed a year later by the deadly Typhoon Bopha/Pablo. And Pakistan experienced its third straight year of widespread flooding. When recurring disasters strike the same communities – communities which haven’t yet recovered from the previous disaster – the results can be devastating. The resilience of affected individuals and communities is undermined. Particularly when the communities are poor and marginalized (who tend to be more affected by disasters in any case), it can be hard to muster the energy and the resources to start over again. The devastation caused by recurring disasters in 2012 highlights the need for increased commitment and investment in disaster risk reduction. But we also know that it’s always easier to mobilize support for responding to a disaster than for taking measures to reduce the risk of future ones.

Statistically, 2012 was an ‘average’ year for disasters without the mega-disasters we saw in 2010 (Haiti) or 2011 (Japan). The deadliest disaster of 2012 was Typhoon Bopha/Pablo in the Philippines; the most expensive disaster was Hurricane Sandy in the US and Caribbean; and the disaster which affected the most people was the drought/food crisis in the Sahel region.

In this year’s review, we also looked at the role of regional organizations in disaster risk management – which is part of a larger research project we’re undertaking. Regional organizations seem to be playing an increasingly important role in the complex world of disaster risk management but have received very little attention. Regional organizations, we found, come in many sizes and shapes and they are involved in different kinds of work with disasters. For example, we found that all regions have developed framework agreements on disaster risk reduction or response. In most regions technical cooperation mechanisms – such as early warning systems – have been established. But few regional bodies provide the means for channeling financial assistance after a disaster.

We also looked at one particular type of disaster – wildfires. As evident in Australia, Russia and the United States, wildfires can destroy large swathes of forest. And yet, wildfires are not very significant in the overall scheme of disasters (with only 156 wildfire disasters reported over the past decade resulting in only 0.07 percent of global disaster fatalities.) But the combination of urban sprawl and a hotter and drier climate because of climate change in many parts of the world make it likely that we’ll see more wildfires in the future.

Finally, we looked at the gender dimensions of natural disasters. Natural disasters and climate change often exacerbate existing inequalities and discriminations, including those that are gender-based and can lead to new forms of discrimination. But women are not just victims; they play significant roles in disaster risk management. They are often at the frontline when disasters occur and they bring valuable resources to risk reduction and recovery efforts. When they are able to participate in the decisions that affect their lives, their families, and their communities, women have much to offer.

Authors

Elizabeth Ferris

Image Source: © Lucas Jackson / Reuters

An American Future Filled with Promise

Michael E. O'Hanlon and Gen. David Petraeus — Mon, 08 Apr 2013 12:29:00 -0400

As politicians in Washington focus on reining in America’s worrisome deficit, they tend to have attitudes of doom and gloom. They convey fears of shortchanging future generations, overtaxing workers, depriving the needy, killing the fragile economic recovery and failing to make crucial investments.

This narrative contains elements of truth. But it is too pessimistic and contributes to our psychological and political paralysis, reinforcing convictions held by members of both parties that they must not yield on core principles, lest the country’s future be compromised. There is, however, a more positive and more accurate reality. The United States could be on the threshold of a period of remarkable progress. It has a number of unique opportunities, including:

An energy revolution. We are the world’s largest producer of natural gas, with a 100-year supply, and we are on track to become among the largest producers of crude oil.
A manufacturing revolution. We are rapidly developing robotics and 3-D printing, areas in which the United States is among the world’s leaders.
A revolution in life sciences. Genetics and stem-cell technology offer great potential in fields such as agriculture and pharmaceuticals and fundamentally new approaches in medicine.
The IT revolution and the transition to cloud computing, in which we are also leading.

Read the full article »

Authors

Michael E. O'Hanlon
Gen. David Petraeus

Publication: The Washington Post

What the Stockton Municipal Bankruptcy Means, And Doesn't

Tracy Gordon — Tue, 02 Apr 2013 11:20:00 -0400

A few years ago, it was fashionable to compare California, Illinois, or whatever U.S. state was struggling financially to the troubled island nation of Greece. Now, with Stockton, California the largest U.S. municipality to enter bankruptcy, it may be tempting to make another Mediterranean comparison - this time to the troubled island nation of Cyprus.

In Cyprus as well as Stockton (plus San Bernardino, California and Jefferson County, Alabama), the question is: Who will be left holding the bag? A common theme is "haircuts," or possible losses for investors (bank depositors in Cyprus; bondholders in California) to spare wider pain to taxpayers, pensioners, public employees, and other local stakeholders.

One problem with haircuts is that they can impair future market access: the government in question may have to pay higher borrowing costs to regain investor confidence. A wider concern is contagion: If investors fear they won't get their money back, they might demand higher interest rates from the sector as a whole. Moody's Investors Service publicly worried about such contagion last summer, in a report critical of U.S. municipalities and what the organization viewed as changing norms toward bankruptcy.

But there are a few reasons to be skeptical about the contagion scenario applied to munis. First, although broad (worth about $3.7 trillion in 2012), the municipal bond market is not very deep. On the supply side, a few large issuers like California, New York, and Texas dominate. On the demand side, most investors are households or institutions representing households such as money market mutual funds.

Because of its traditional mom-and-pop structure, muni bonds don't transact very often. When they do, different buyers may pay different prices for the same bond, and prices can rise faster than they fall (the "rockets and feathers" phenomenon). Economists have rightly criticized these features as inefficient. However, some market participants counter that proposed cures might be worse than the disease.

A silver lining of less-than-perfect information and higher transaction costs in muni markets may be that shocks are transmitted slowly through the system. More educated institutional investors are probably able to sort good apples from bad; other investors simply "buy and hold." A recent IMF working paper confirms these predictions: after a bad credit event, investors apparently shift their money from places like California and the City of New York to safer issuers.

Rather than suffering from Stockton's misfortune, other states and municipalities will probably benefit, much like U.S. Treasuries after the 2008 financial crisis. Interestingly, the IMF authors did detect some evidence of contagion, or bad news spreading, but in an unexpected direction from munis to U.S. Treasuries. One explanation is that investors looked at a Illinois or California and worried about prospects for a federal bailout, analogous to Cyprus and the rest of the Eurozone.

Still, measured effects were small and took time to surface. The U.S. also has a long history of steadfastly refusing requests for local aid.

In any event, it will take some time to parse through yesterday's Stockton ruling. Its most significant effects may be felt within California—where many municipalities pay into the state's CalPERS pension fund. The judge ruled that CalPERS was just another creditor, but we still don't know who will be left holding the bag.

Authors

Tracy Gordon

Publication: Real Clear Markets

Image Source: © Lucy Nicholson / Reuters

Expand State Partnerships for Passenger Rail

Robert Puentes and Joseph Kane — Wed, 13 Mar 2013 18:39:00 -0400

As passenger rail ridership grows nationwide, Amtrak and some states are engaging in innovative new partnerships to foster this demand. To comply with the Passenger Rail Investment and Improvement Act (PRIIA) that passed in 2008, federal and state policymakers will not only need to focus on the financial and operational performance of short-distance routes, where over 80 percent of the system’s ridership occurs, but also on the future of long-distance routes.

Of course, more federal support would help. But with additional federal funding unlikely and state budgets significantly pared, policymakers will need to consider more sustainable ways to finance the nation’s increasingly intermodal transportation network. Passenger rail, in particular, has shown the importance of states stepping up and taking action.

And several states have already seized the opportunity. Before PRIIA passed, 15 states paid at least a portion of the operating expenses for 21 different routes, affirming their commitment to passenger rail and placing them in a better position to target future spending. Oklahoma and Texas, for example, have jointly financed the Heartland Flyer and contributed more than $17 million combined from 2007 to 2011. Collectively, the 15 states have allocated almost $850 million during the same span.

Some states have also invested in rolling stock and other capital improvements that have furthered economic development along different corridors. North Carolina, for instance, has actively supported the Carolinian and Piedmont by rehabilitating stations and upgrading state-owned tracks. California has continued to invest in the Pacific Surfliner, the Capitol Corridor, and the San Joaquin, all of which rank among the 10 busiest routes nationally.

By prioritizing passenger rail, states are investing in a mode that has appealed to more travelers and strengthened the economic linkages between metro areas. But as states assume greater responsibility for passenger rail, they should be given greater flexibility in how they manage routes. While a dedicated source of funding, such as a ticket tax, would certainly help, states and metropolitan planning organizations (MPOs) could also benefit from having the ability to transfer federal funds to support intercity passenger rail, as they currently can between highway and transit programs.

Still, even with this flexibility, Amtrak and the states will need to address both short-distance and long-distance routes. Although PRIIA requires states to operationally support short-distance routes only, long-distance routes should not be exempt from this requirement. Amtrak and the states need to carefully weigh the benefits—geographically and otherwise—that these routes provide relative to their high operating costs.

The goal here is not to eliminate these routes but to strengthen the federal-state partnership. Expanding PRIIA in this way should be seen as an opportunity to innovate and collaborate, allowing Amtrak and the states to shape the future of passenger rail in response to local demands and a clear national plan. If states feel that certain long-distance routes are not worth supporting, then they should be scaled back, as has already been debated for routes such as the Pennsylvanian. If anything, though, states should feel confident and emboldened in this task based on their ability to coordinate other cross-border infrastructure investments. States should lead with greater decisiveness and action.

Indeed, supporting passenger rail comes down to a simple choice for federal and state policymakers: In the long run, is it wiser to invest $6 million to construct one mile of a new 4-lane highway, or to spend that same $6 million to cover the operating expenses for a passenger rail route spanning 300 miles?

Authors

Robert Puentes
Joseph Kane

A New Alignment: Strengthening America's Commitment to Passenger Rail

Robert Puentes, Adie Tomer and Joseph Kane — Fri, 01 Mar 2013 00:00:00 -0500

American passenger rail is in the midst of a renaissance. Ridership on Amtrak—the primary U.S. carrier—is now at record levels and growing fast. This research shows that the country’s 100 largest metropolitan areas are primarily behind this trend, especially ten major metros responsible for nearly two-thirds of total ridership.

Driving the connection between these metropolitan areas are short-distance corridors, or routes traveling less than 400 miles, that carry 83 percent of all Amtrak passengers. States now have formalized relationships with Amtrak to upgrade tracks, operate routes, and redevelop stations. The result is a new federalist partnership where Amtrak, the federal government, and states share responsibility for the network’s successes and failures.

This report is the first analysis to focus on metropolitan area statistics for passenger rail rather than individual stations or cities. Its findings will help policymakers and state leaders better understand the location dynamics of Amtrak: where it works well, and the areas poised to benefit from new and expanded services.

Findings:

Amtrak ridership grew by 55 percent since 1997, faster than other major travel modes, and now carries over 31 million riders annually, an all-time high.
The 100 largest metropolitan areas generate nearly 90 percent of Amtrak's ridership, especially those in the Northeast and West.
Only ten metropolitan areas are responsible for almost two-thirds of Amtrak ridership.
The short distance routes consistently dominate Amtrak ridership share and captured nearly all of Amtrak's recent growth.
Combined, Amtrak's short-distance corridors generated a positive operating balance in 2011—while corridors over 400 miles returned a negative operating balance.

Read the report » (PDF)
Follow the passenger rail conversation on Twitter using the hashtag #NextRail »
View our interactive application to see Amtrak route data for the largest 100 metro areas »

Downloads

Full report

Authors

Robert Puentes
Adie Tomer
Joseph Kane

Image Source: Jonathan Rissmeyer

New Partnerships for American Rail

Robert Puentes — Fri, 01 Mar 2013 11:00:00 -0500

American passenger rail is in the midst of a renaissance. Ridership grew by 55 percent since 1997 and is now at record levels, with over 31 million travelers annually. That's faster than other travel modes like aviation and far outpaces the growth in population and economic output during that time. Travel corridors like New York to Washington, Seattle to Portland, and Chicago to Milwaukee all boast higher shares of riders on rails than in the air.

Painting such a rosy picture of American rail may seem incongruous to those that like to chastise its beleaguered carrier, Amtrak, for transgressions related to food service, timeliness, and subsistence on federal subsidies. But in a new report, my colleagues Adie Tomer, Joseph Kane, and I find that Amtrak is actually finding itself well-positioned for the future. Part of this was initiated by federal lawmakers who, in 2008, gave Amtrak the kick-in-the-pants it needed by ordering the establishment of metrics and benchmarking for performance.

Smartly, federal lawmakers realized that achieving better performance—both financially and operationally—could not come without a new kind of commitment from Amtrak's partners. States now share the operating costs for short-distance rail corridors that stretch 750 miles or less from end to end. Today, these routes are Amtrak's high-performers, carrying around 85 percent of travelers.

Importantly, once they have "skin in the game," states are motivated to target investments more precisely and develop plans more comprehensively, better tailoring maintenance needs and capital improvements to local demands. Some states have already adopted such strategies and offer innovative and replicable models. North Carolina owns part of the tracks and encourages economic development along two different corridors. Virginia recently expanded service to metros lacking connections in the southwest and southeast portions of the state. Maine's Northern New England Passenger Rail Authority presents a new governance model for forging partnerships and coordinating action.

Building on this new federal-state alignment will require additional action. As the federal sequestration battle clearly illustrates, Washington isn’t putting any new money into Amtrak anytime soon. But partly because of the existing partnerships with 15 states, Amtrak has said it can weather the cuts easily enough.

So let's extend that requirement for state support to routes longer than 750 miles. After all, our research shows that the long-distance routes carried only 15 percent of the travelers in 2012 but, combined, constitute 43 percent of Amtrak's route-associated operating costs. This is not just a matter of offloading responsibility from the federal government to states. As seen in the short-distance routes that already enjoy state support, such a partnership results in a better sharing of risks and rewards.

Then, in exchange for greater responsibility from Washington, states should have added flexibility in how they allocate existing funds. For example, current federal law allows states and metro areas to transfer funds between highway and transit programs. Among other benefits, this freedom of financing greatly assists in bottom-up problem solving and gives additional consideration to alternative solutions that achieve a more balanced transportation network. States and metro areas should have the same flexibility when they support operating or capital investments for intermetropolitan passenger rail.

The goal here is to strengthen passenger rail in the United States by strengthening the federal-state partnership. While Amtrak has done a lot to remake itself in recent years, states need to reaffirm their commitment for the model to be sustainable.

Authors

Robert Puentes

Immigration: the Magnet Versus the Fence

Jill Wilson — Fri, 01 Mar 2013 17:00:00 -0500

Since President Obama’s re-election, Congress—especially Republicans—have had increased political incentive to reform our immigration system, including support for the 11 million unauthorized immigrants living in the U.S. to gain legal status. But the biggest stumbling block remains twofold: how to support a legalization program without appearing to reward past illegal immigration or encourage it in the future.

To surmount the first hurdle, politicians are focusing on the requirements that unauthorized immigrants would need to meet in order to qualify for legal status. Those wishing to legalize would need to register, pass a background check, and pay fees in order to gain a probationary legal status before moving through the other steps to permanent legal status: paying taxes, waiting in “line” behind other prospective immigrants, and learning English. In other words, politicians are advocating a “tough but fair” approach whereby immigrants would earn their new status, not get a free pass.

To surmount the second hurdle—preventing future illegal immigration—some politicians, including the Senate’s “Gang of Eight,” propose that immigrants’ adjustment to permanent legal status be predicated on the achievement of better enforcement, including a tracking system to make sure those admitted legally on temporary visas do not overstay and increased deployment of high tech tools to reduce border crossings. A commission of leaders from the Southwest border—in consultation with the secretary of Homeland Security—would monitor progress and recommend when the goal has been met in order to “trigger” those immigrants in a probationary status to move forward in the process of obtaining a green card.

While this idea has the veneer of being tough, it fails to address the factors creating the demand for illegal workers: employers willing to hire them and an outdated immigration system that does not provide legal pathways for needed workers. In other words, we’re focusing on the “fence” rather than the more powerful “magnet.”

We must learn from our past mistakes. The Immigration Reform and Control Act of 1986 (which included a large-scale legalization program and new employer sanctions for hiring unauthorized workers) failed to prevent future illegal immigration for three main reasons: 1) It didn’t provide a reliable means for employers to verify worker’s statuses; 2) it did not include strong, enforceable penalties for employers who hired workers illegally; and 3) it did not provide sufficient legal pathways for the workers that our economy came to demand.

Certainly, preventing unlawful entries at the border is important, and we’ve made great strides in reducing illegal crossings. And the fact that half of unauthorized residents in the U.S. are estimated to have entered the country legally demonstrates that we must do more to detect and prevent visa overstays. But by greatly reducing the force of the jobs magnet, the pressure on the border will ease, and we will likely spend fewer resources there.

To reduce the demand for illegal labor, we must do two things. First, we must come up with an efficient and effective way to verify someone’s authorization to work in this country so that employers cannot continue to hire people illegally. The E-Verify system was introduced in 1996 as a tool for employers to electronically verify work authorization. Initially fraught with high error rates, the program’s accuracy has improved over time. Concurrently, its use has expanded so that 19 states require it to some degree but still less than 10 percent of U.S. employers use the system. In Tuesday’s House hearing on the program, it received mixed reviews, but was generally accepted as a system to mend not end. One proposed improvement is to require workers to use a more fraud-resistant form of identification, but a biometric ID has raised concerns about privacy and cost.

Second, we must re-align our visa system with our current economic need for workers—whether they are temporary or permanent, highly educated or not—so that the jobs magnet can work through legal means. But because our economy is dynamic, we can’t stop there. We must also include mechanisms for more flexibly adjusting immigration levels as economic conditions change. Given that it has been almost 25 years since the last major immigration overhaul, our current system is sorely outdated, and it’s unrealistic to expect Congress to make frequent adjustments in the future. Rather, we need a real-time, data-driven method—whether it comes in the form of a commission or a federal bureau—to address our changing labor market needs and protect US workers. We must also do some soul searching about what else we value—family unity and humanitarian assistance, for example—in order to determine levels and priorities for family-based, refugee, and other non-employment visa categories. The best remedy for illegal immigration is a workable legal immigration system.

In the immigration debates, there’s a fence and there’s a magnet. Congress must not fall prey to tough rhetoric about the fence at the expense of taking more pragmatic action to address the magnet.

Authors

Jill Wilson

Regional Innovation Clusters Begin to Add Up

Mark Muro — Wed, 27 Feb 2013 00:00:00 -0500

One frequent criticism of the Obama administration’s welcome conviction on economic regionalism—epitomized by its programs to stimulate regional industry clusters with small matching grants usually in the $1 million to $2 million range—is that it remains small bore.

It’s true that the enormity of the nation’s economic problems calls for large-scale interventions that transcend the marginal. After all, as we at the Metro Program keep stressing, the nation has a lot of work to do to reorient a drifting U.S. economy beyond consumption and more toward innovation, production, and exports. So no wonder we and others have hankered for more heft in Washington’s economic responses. Surely, for that matter, the desire for more weighty action explains part of the interest that has been generated by the administration’s $1 billion proposal (talked up in the State of the Union address) to create a network of 15 institutes for manufacturing innovation around the nation.

And yet, what if small ball—engaged in persistently—begins to add up to something larger? That was the thought that crossed my mind when I happened onto an intriguing dot map last week that locates no less than “56 federally funded cluster initiatives” scattered across the Lower 48 states and Alaska.

The map yields genuine insight. Arrayed all across the map, the Google map push pins assembled by the Small Business Administration call out an impressive array of future-leaning collaborations aimed at advancing next economy clusters in diverse industries all over America.

There are some 18 advanced manufacturing collaborations, working on new materials, new processes, new control systems, and skills development in places as diverse as East Tennessee and Iowa and Southern Arizona and greater Philadelphia. There are 10 clean energy technology projects ongoing in Southeast Michigan, Florida, San Diego, Oregon, the Carolinas, and elsewhere. There are initiatives working to rally various actors in the food industries of New England, Bristol Bay, and the Finger Lakes region. And there are other efforts focused on IT, the space economy, water technology, and wood products—all collaborative, all aimed at convening the actors in a regional cluster, coordinating disparate efforts, and reducing the risks of innovation and investment.

Nor is that all. Beyond all of that, another map on the Economic Development Administration website identifies another 19 regional innovation projects that have been funded through the EDA’s i6 program. Similar to the cluster efforts, the i6 effort provides matching support to innovative initiatives that propose accelerate technology commercialization, new venture formation, job creation, and economic growth in U.S. regions.

The inescapable conclusion: Proliferating under the radar, the Obama administration’s “small bore” regional initiatives in economic development are beginning to add up to something meaningful. As of now some 74 cluster initiatives and region-focused innovation efforts are underway, helping to catalyze more linked effort and creative economic development in the nation’s regional centers of innovation. Through these initiatives some $250 million is being used to raise matching money and catalyze regional efforts to strengthen the nation’s regional innovation ecosystems.

To be sure, it’s a big country, and the cluster grants remain tiny. But the fact remains, as Bruce Katz and I have discussed, that well-designed cluster and accelerator strategies—ones that require sizable local matches through competitive award processes—are a low-cost way to stimulate a significant amount of collaboration, innovation, and new economic activity in the local economic regions that are the ultimate source of national prosperity. For that reason, it’s good to see the map filling up. The nation badly needs to avoid big mistakes slashing federal R&D investments through the sequestration. And it needs to deliver on game-changers like immigration reform while implementing bold experiments like the manufacturing hubs. But it also needs to maintain and extend the broad array of modest partnerships that the map shows are gradually renewing the innovation commons in U.S. industries, region by region, cluster by cluster.

Authors

Mark Muro