SUMMARY OF PAPERS RELEASED AS OF JANUARY 2015

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INDEX OF THE HAMILTON PROJECT PAPERS BY DATE 2015 .............................................................................................................................................................. 7

Reforming Occupational Licensing Policies .............................................................................................. 7

2014 .............................................................................................................................................................. 7

In Times of Drought: Nine Economic Facts about Water in the United States ........................................ 7

Shopping for Water: How the Market Can Mitigate Water Shortages in the American West ................ 7

The Path to Water Innovation ................................................................................................................. 8

Tomorrow’s Catch: A Proposal to Strengthen the Economic Sustainability of U.S. Fisheries ................. 8

What’s the Catch? Challenges and Opportunities of the U.S. Fishing Industry ....................................... 8

Expanding Preschool Access for Disadvantaged Children ....................................................................... 8

Addressing the Parenting Divide to Promote Early Childhood Development for Disadvantaged Children .................................................................................................................................................... 9

Reducing Unintended Pregnancies for Low-Income Women .................................................................. 9

Designing Effective Mentoring Programs for Disadvantaged Youth ....................................................... 9

Expanding Summer Employment Opportunities for Low-Income Youth .............................................. 10

Addressing the Academic Barriers to Higher Education ........................................................................ 10

Expanding Apprenticeship Opportunities in the United States ............................................................. 10

Improving Employment Outcomes for Disadvantaged Students .......................................................... 11

Providing Disadvantaged Workers with Skills to Succeed in the Labor Market .................................... 11

Supporting Low-Income Workers through Refundable Child-Care Credits ........................................... 11

Building on the Success of the Earned Income Tax Credit ..................................................................... 11

Encouraging Work Sharing to Reduce Unemployment ......................................................................... 12

Designing Thoughtful Minimum Wage Policy at the State and Local Levels ......................................... 12

Smarter, Better, Faster: The Potential for Predictive Analytics and Rapid-Cycle Evaluation to Improve Program Development and Outcomes .................................................................................................. 12

Ten Economic Facts about Crime and Incarceration in the United States ............................................ 12

Think Before You Act: A New Approach to Preventing Youth Violence Dropout .................................. 13

A New Approach to Reducing Incarceration While Maintaining Low Rates of Crime ........................... 13

Unlocking Spectrum Value through Improved Allocation, Assignment, and Adjudication of Spectrum Rights ...................................................................................................................................................... 13

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The Economic Promise of Wireless Spectrum ....................................................................................... 14

2013 ............................................................................................................................................................ 14

A Dozen Facts about America’s Struggling Lower-Middle Class ............................................................ 14

Giving Secondary Earners a Tax Break: A Proposal to Help Low- and Middle-Income Families ............ 14

Strengthening SNAP for a More Food-Secure, Healthy America ........................................................... 15

Redesigning the Pell Grant Program for the Twenty-First Century ....................................................... 15

Simplifying Estimates of College Costs................................................................................................... 15

Informing Students about Their College Options: A Proposal for Broadening the Expanding College Opportunities Project ............................................................................................................................. 16

Thirteen Economic Facts About Social Mobility and the Role of Education .......................................... 16

Using Data to Improve the Performance of Workforce Training ........................................................... 16

Building on Recent Advances in Evidence-Based Policymaking ............................................................ 17

Transitioning to Bundled Payments in Medicare ................................................................................... 17

Reforming Federal Support for Risky Development .............................................................................. 17

Restructuring Cost Sharing and Supplemental Insurance for Medicare ................................................ 18

An Evidence-Based Path to Disability Insurance Reform ....................................................................... 18

Eliminating Fossil Fuel Subsidies ............................................................................................................ 18

Better Ways to Promote Saving through the Tax System ...................................................................... 19

Limiting Individual Income Tax Expenditures ........................................................................................ 19

Replacing the Home Mortgage Interest Deduction ............................................................................... 19

Funding Transportation Infrastructure with User Fees ......................................................................... 19

Creating an American Value-Added Tax ................................................................................................ 20

The Many Benefits of a Carbon Tax ....................................................................................................... 20

Overhauling the Temporary Work Visa System ..................................................................................... 20

Increasing the Role of the Private Sector in Housing Finance ............................................................... 20

National Defense in a Time of Change ................................................................................................... 21

Making Defense Affordable ................................................................................................................... 21

2012 ............................................................................................................................................................ 21

A Dozen Economic Facts About K-12 Education .................................................................................... 21

Learning from the Successes and Failures of Charter Schools ............................................................... 22

Harnessing Technology to Improve K-12 Education .............................................................................. 22

Staying in School: A Proposal to Raise High School Graduation Rates .................................................. 22

Energy Policy Opportunities and Continuing Challenges in the Presence of Increased Supplies of

Natural Gas and Petroleum .................................................................................................................... 23

Modernizing Bonding Requirements for Natural Gas Producers .......................................................... 23

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Leveling the Playing Field for Natural Gas in Transportation ................................................................ 23

A Strategy for U.S. Natural Gas Exports ................................................................................................. 24

The U.S. Immigration System: Potential Benefits of Reform ................................................................. 24

Rationalizing U.S. Immigration Policy: Reforms for Simplicity, Fairness, and Economic Growth .......... 24

A Dozen Economic Facts About Tax Reform .......................................................................................... 25

2011 ............................................................................................................................................................ 25

Building America’s Job Skills with Effective Workforce Programs: A Training Strategy to Raise Wages

and Increase Work Opportunities .......................................................................................................... 25

Policies to Reduce High-Tenured Displaced Workers’ Earnings Losses Through Retraining ................. 26

Raising Job Quality and Skills for American Workers: Creating More-Effective Education and

Workforce Development Systems in the States .................................................................................... 26

Improving Student Outcomes: Restoring America’s Education Potential ............................................. 26

The Power and Pitfalls of Education Incentives ..................................................................................... 27

Organizing Schools to Improve Student Achievement: Start Times, Grade Configurations, and Teacher

Assignments ........................................................................................................................................... 27

A Dozen Economic Facts About Innovation ........................................................................................... 27

A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs ............................................. 28

Promoting Clean Energy in the American Power Sector ....................................................................... 28

An Energy Technology Corporation Will Improve the Federal Government’s Efforts to Accelerate

Energy Innovation .................................................................................................................................. 28

A Better Approach to Environmental Regulation: Getting the Costs and Benefits Right ...................... 29

Investing in the Future: An Economic Strategy for State and Local Governments in a Period of Tight

Budgets .................................................................................................................................................. 29

Lowering Borrowing Costs for States and Municipalities Through CommonMuni ............................... 29

Public-Private Partnerships to Revamp U.S. Infrastructure ................................................................... 30

Fix It First, Expand It Second, Reward It Third: A New Strategy for America’s Highways...................... 30

2010 ............................................................................................................................................................ 30

Creating 21st Century Jobs: Increasing Employment and Wages for American Workers in a Changing

World ..................................................................................................................................................... 30

A Modern Corporate Tax ....................................................................................................................... 31

Supporting Work: A Proposal for Modernizing the U.S. Disability Insurance System ........................... 31

Grading Higher Education: Giving Consumers the Information They Need .......................................... 31

An Economic Strategy to Renew American Communities ..................................................................... 31

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Bringing Jobs to People: How Federal Policy Can Target Job Creation for Economically Distressed

Areas ...................................................................................................................................................... 32

The Mobility Bank: Increasing Residential Mobility to Boost Economic Mobility ................................. 32

Ten Economic Facts about Immigration ................................................................................................ 32

The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and

Earnings .................................................................................................................................................. 33

2009 ............................................................................................................................................................ 33

Strengthening One-Stop Career Centers: Helping More Unemployed Workers Find Jobs and Build

Skills ........................................................................................................................................................ 33

2008 ............................................................................................................................................................ 33

A U.S. Innovation Strategy for Climate Change Mitigation .................................................................... 33

Improving the Measurement of Poverty ............................................................................................... 34

From Prison to Work: A Proposal for a National Prisoner Reentry Program ......................................... 34

From Recession to Recovery to Renewal: An Economic Strategy to Achieve Broadly Shared Growth . 34

Path to Prosperity: An Economic Strategy to Achieve More Broadly Shared Growth .......................... 35

An Opt-Out Home Mortgage System ..................................................................................................... 35

Facilitating Shared Appreciation Mortgages to Prevent Housing Crashes and Affordability Crises ...... 35

Getting More from Low-Income Housing Assistance ............................................................................ 36

An Economic Strategy for Investing in America’s Infrastructure ........................................................... 36

Pay-As-You-Drive Auto Insurance: A Simple Way to Reduce Driving-Related Harms and Increase

Equity ..................................................................................................................................................... 36

The Untapped Promise of Wireless Spectrum ....................................................................................... 36

America’s Traffic Congestion Problem: Toward a Framework for National Reform ............................. 37

Air Support: Creating a Safer and More Reliable Air Traffic Control System ......................................... 37

Bringing Broadband to Unserved Communities .................................................................................... 37

Missing Markets: Why Markets that Can Reduce Risks are Missing and What Can be Done About It . 37

Stabilizing State and Local Budgets: A Proposal for Tax-Base Insurance ............................................... 38

Increasing Annuitization of 401(k) Plans with Automatic Trial Income ................................................. 38

Financing Losses from Catastrophic Risks .............................................................................................. 38

If, When, How: A Primer on Fiscal Stimulus ........................................................................................... 39

2007 ............................................................................................................................................................ 39

A Hand Up: A Strategy to Reward Work, Expand Opportunity, and Reduce Poverty ........................... 39

Better Workers for Better Jobs: Improving Worker Advancement in the Low-Wage Labor Market .... 39

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New Hope: Fulfilling America’s Promise to “Make Work Pay” .............................................................. 40

Employment-Based Tax Credits for Low-Skilled Workers ...................................................................... 40

An Economic Strategy to Address Climate Change and Promote Energy Security ................................ 40

An Equitable Tax Reform to Address Global Climate Change ................................................................ 40

A U.S. Cap-and-Trade System to Address Global Climate Change ......................................................... 41

Universal, Effective and Affordable Health Insurance: An Economic Imperative ................................. 41

Achieving Universal Coverage Through Medicare Part E(veryone) ....................................................... 41

Taking Massachusetts National: An Incremental Approach to Universal Health Insurance ................. 42

A Comprehensive Cure: Universal Health Care Vouchers ..................................................................... 42

Achieving Progressive Tax Reform in an Increasingly Global Economy ................................................. 42

Reforming Corporate Taxation in a Global Economy: A Proposal to Adopt Formulary Apportionment

................................................................................................................................................................ 42

Taxing Privilege More Effectively: Replacing the Estate Tax with an Inheritance Tax ........................... 43

Rehabilitating the Business Income Tax................................................................................................. 43

Evolving Beyond Traditional Employer-Sponsored Health Insurance ................................................... 43

The Promise of Progressive Cost Consciousness in Health-care Reform ............................................... 43

A Wellness Trust to Prioritize Disease Prevention ................................................................................. 44

Mending the Medicare Prescription Drug Benefit: Improving Consumer Choices and Restructuring

Purchasing .............................................................................................................................................. 44

An Education Strategy to Promote Opportunity, Prosperity, and Growth ............................................ 44

College Grants on a Postcard: A Proposal for Simple and Predictable Federal Student Aid ................. 44

Success By Ten: Intervening Early, Often, and Effectively in the Education of Young Children ............ 45

Reshaping Student Loan Programs to Fit the Careers of Young College Graduates.............................. 45

2006 ............................................................................................................................................................ 45

Promoting Opportunity and Growth through Science, Technology, and Innovation ............................ 45

Investing in the Best and Brightest: Increased Fellowship Support for American Scientists and

Engineers ................................................................................................................................................ 46

Prizes for Technological Innovation ....................................................................................................... 46

Aligning Patent Presumptions with the Reality of Patent Review: A Proposal for Patent Reform ....... 46

A Growth-Enhancing Approach to Economic Security ........................................................................... 46

Universal Insurance: Enhancing Economic Security to Promote Opportunity ...................................... 47

Fundamental Restructuring of Unemployment Insurance: Wage-Loss Insurance and Temporary

Earnings Replacement Accounts ............................................................................................................ 47

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Reforming Unemployment Insurance for the Twenty-First Century Workforce ................................... 47

Growth, Opportunity, and Prosperity in a Globalizing Economy ........................................................... 48

The Simple Return: Reducing America’s Tax Burden Through Return-Free Filing................................. 48

An Economic Strategy to Advance Opportunity, Prosperity, and Growth............................................. 48

Identifying Effective Teachers Using Performance on the Job .............................................................. 48

Summer Opportunity Scholarships (SOS): A Proposal to Narrow the Skills Gap ................................... 49

Improving Opportunities and Incentives for Saving by Middle- and Low-Income Households ............ 49

SUMMARY OF PAPERS RELEASED AS OF JANUARY 2015

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2015

Reforming Occupational Licensing Policies

Hamilton Project Discussion Paper

January 2015

Morris M. Kleiner, Professor, Humphrey School of Public Affairs, University of Minnesota

Evidence suggests that occupational licensing has had an important influence on wage determination,

benefits, employment, and prices in ways that impose net costs on society with little improvement to service

quality, health, and safety. To improve occupational licensing practices, Morris Kleiner proposes four specific

reforms.

2014

In Times of Drought: Nine Economic Facts about Water in the United States Hamilton Project Economic Facts October 2014 Melissa S. Kearney, Director, The Hamilton Project Benjamin H. Harris, Policy Director, The Hamilton Project Brad Hershbein, Visiting Fellow, The Hamilton Project

This Hamilton Project memo presents nine economic facts that provide relevant background context to the water crisis in the United States. Chapter 1 reviews the historical, current, and projected occurrence of drought in the United States. Chapter 2 describes the importance of water to our national economy. Chapter 3 underscores some of the economic and institutional barriers to more-efficient use of water. We examine these issues through the lens of economic policy, with the aim of providing an objective framing of America's complex relationship with water.

Shopping for Water: How the Market Can Mitigate Water Shortages in the American West A Hamilton Project Discussion Paper October 2014 Peter Culp, Partner, Squire Patton Boggs, LLP Robert Glennon, Regents' Professor and Morris K. Udall Professor of Law and Public Policy, Rogers College of Law, University of Arizona Gary Libecap, Donald Bren Distinguished Professor of Corporate Environmental Management in the Donald Bren School of Environmental Science & Management and Professor of Economics, University of California, Santa Barbara

In the face of a severe drought in the West, new approaches are required to mitigate the risk of water shortages. In this Hamilton Project paper, Peter Culp, Robert Glennon and Gary Libecap present five proposals to encourage the use of market mechanisms to increase flexibility and resiliency in water management.

SUMMARY OF PAPERS RELEASED AS OF JANUARY 2015

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The Path to Water Innovation A Hamilton Project Discussion Paper October 2014 Newsha Ajami, Director of Urban Water Policy, Water in the West/ NSF-ERC ReNUWIt, Stanford Woods Institute for the Environment Barton “Buzz” Thompson, Robert E. Paradise Professor of Natural Resources Law and Perry L. McCarty Director, Stanford Woods Institute for the Environment David Victor, Professor and Director of the Laboratory on International Law and Regulation, University of California, San Diego

The United States’ aging water infrastructure will be increasingly strained by population growth, economic expansion, and the effects of climate change. In this Hamilton Project paper, Newsha K. Ajami, Barton H. Thompson, Jr., and David G. Victor suggest that solutions to the country’s growing water challenges lie, in part, with the development and adoption of new innovative technologies. The authors present three policy and regulation recommendations to facilitate greater innovation in the water sector.

Tomorrow’s Catch: A Proposal to Strengthen the Economic Sustainability of U.S. Fisheries A Hamilton Project Discussion Paper September 2014 Christopher Costello, Professor of Economics, Bren School of Environmental Science & Management, University of California Santa Barbara; Research Associate, National Bureau of Economic Research

For wild fisheries in U.S. waters, economic prosperity and environmental sustainability go hand in hand. Yet the tremendous economic potential of U.S. fisheries is left largely untapped due to command-and-control style regulations that incentivize inefficient use of economic inputs, overexploitation, and overcapitalization. This proposal calls for an amendment to the Magnuson-Stevens Fishery Conservation and Management Act, the federal law currently guiding the management of U.S. fisheries, that would, for certain fisheries, require transparent comparison of the economic, social, and ecological trade-offs between status quo management and these alternatives. If executed carefully, this new approach could benefit all fishery stakeholders and lead to the design and adoption of fishery management approaches that significantly improve fishery value, recovery, and security for fishing communities, as well as ecological outcomes.

What’s the Catch? Challenges and Opportunities of the U.S. Fishing Industry A Hamilton Project Framing Paper September 2014 Melissa S. Kearney, Director, The Hamilton Project Benjamin H. Harris, Policy Director, The Hamilton Project Brad Hershbein, Visiting Fellow, The Hamilton Project

In this framing paper, The Hamilton Project highlights the economic significance of U.S. fisheries, describes the current landscape of the industry and typical management practices, and explains the “tragedy of the commons” challenge facing this natural resource. The Project also explores possible approaches for improving the economic and ecological sustainability of U.S. fisheries by establishing better-defined property rights as an alternative to traditional management systems.

Expanding Preschool Access for Disadvantaged Children A Hamilton Project Policy Memo June 2014 Elizabeth U. Cascio, Associate Professor of Economics, Dartmouth College Diane Whitmore Schanzenbach, Associate Professor, School of Education and Social Policy, Northwestern University

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In this policy memo, Elizabeth U. Cascio and Diane Whitmore Schanzenbach propose a framework for state and local governments calling for the establishment of high-quality programs in areas where preschool programs do not exist, improved preschool quality in states and localities with subpar programs, and expanded access in areas where high-quality programs already exist. This proposal aims to reduce the income-based gap in school readiness between disadvantaged and higher-income preschool-aged children, and to improve school outcomes for disadvantaged preschool children. This proposal is chapter one of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Promoting Early Childhood Development.

Addressing the Parenting Divide to Promote Early Childhood Development for Disadvantaged Children A Hamilton Project Policy Memo June 2014 Ariel Kalil, Professor, The Harris School of Public Policy, The University of Chicago; Director, Center for Human Potential and Public Policy, The University of Chicago In this policy memo, Ariel Kalil proposes that the U.S. Department of Health and Human Services’ Administration for Children and Families create a task force supporting the collection of evidence to develop more-effective parenting interventions and to promote improved child development in early years. This proposal, targeted at low-income families with young children, will collect evidence on successful parenting interventions for young children through rigorous experiments, and will develop new interventions that are lower-cost and better-matched to families’ needs. This proposal is chapter two of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Promoting Early Childhood Development.

Reducing Unintended Pregnancies for Low-Income Women A Hamilton Project Policy Memo June 2014 Isabel V. Sawhill, Cabot Family Chair & Senior Fellow, Brookings Institution Joanna Venator , Research Assistant, Brookings Institution In this policy memo, Isabel Sawhill and Joanna Venator propose that the U.S. Department of Health and Human Services’ Office of Population Affairs, in conjunction with state governments, reduce unintended pregnancies through a social marketing campaign to encourage more young women to use long-acting reversible contraceptives (LARCs). This proposal, targeted at unmarried women between the ages of 15 and 30, aims to expand awareness so more low-income women use a LARC or other method of contraception, thereby reducing the number of unintended pregnancies and lowering the number of children born into poverty. This proposal is chapter three of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Promoting Early Childhood Development.

Designing Effective Mentoring Programs for Disadvantaged Youth A Hamilton Project Policy Memo June 2014 Phillip Levine, A. Barton Hepburn and Katharine Coman Professor of Economics, Wellesley College; Research Associate, National Bureau of Economic Research

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In this policy memo, Phillip B. Levine proposes that nongovernmental organizations—including nonprofits, foundations, and charitable organizations—as well as private-sector entities expand community-based mentoring programs, such as the Big Brothers Big Sisters program, in accordance with a set of best practices. This proposal, targeted at disadvantaged youth who have few or no adult role models in their lives, aims to improve educational and labor market outcomes for disadvantaged youth. This proposal is chapter four of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Supporting Disadvantaged Youth.

Expanding Summer Employment Opportunities for Low-Income Youth A Hamilton Project Policy Memo June 2014 Amy Ellen Schwartz, Professor of Public Policy, Education, and Economics, New York University; Director, NYU Institute for Education; and Social Policy Daniel P. Moynihan Professor of Public Affairs, Maxwell School, Syracuse University Jacob Leos-Urbel , Toepelt Nicolai and George S. Blair Assistant Professor, Claremont Graduate University

In this policy memo, Amy Ellen Schwartz and Jacob Leos-Urbel propose that the U.S. Department of Labor distribute federal grants to states for municipalities to provide summer employment to disadvantaged youth, first through a pilot program and then through a nationwide expansion. This proposal, targeted at low-income youth who are enrolled in or have recently graduated from high school, aims to increase school attendance, improve educational outcomes, and reduce violent behavior and crime. This proposal is chapter five of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Supporting Disadvantaged Youth.

Addressing the Academic Barriers to Higher Education A Hamilton Project Policy Memo June 2014 Bridget Terry Long, Academic Dean and Xander Professor of Education and Economics, Harvard Graduate School of Education In this policy memo, Bridget Terry Long proposes that school districts, community colleges, university systems, and state and federal governments reform the college remediation system by improving placement in remediation classes, providing better remediation services, and adopting measures to prevent the need for remediation. This proposal, targeted at disadvantaged, academically underprepared students in high school and college, aims to reduce the need for college-level remediation and to better match underprepared students with effective resources to equip them with the skills they need to succeed in college and in the workforce. This proposal is chapter six of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Supporting Disadvantaged Youth.

Expanding Apprenticeship Opportunities in the United States A Hamilton Project Policy Memo June 2014 Robert Lerman, Professor, Department of Economics, American University In this policy memo, Robert I. Lerman proposes a series of targeted federal and state-level initiatives to expand access to registered apprenticeship programs by creating marketing initiatives, building on existing youth apprenticeship programs, extending the use of federal subsidies, and designating occupational standards. This proposal, targeted toward at-risk youth and middle-skill adults in low-wage jobs, aims to improve human capital and raise earnings for apprentices. This proposal is chapter seven of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Building Skills.

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Improving Employment Outcomes for Disadvantaged Students A Hamilton Project Policy Memo June 2014 Harry J. Holzer, Professor of Public Policy, McCourt School of Public Policy at Georgetown University In this policy memo, Harry J. Holzer proposes the creation of financial incentives for public colleges and university systems to offer classes in high-return fields and for employers to offer more training to their employees. This proposal, targeted at disadvantaged youth who have some academic preparation for higher education, aims to generate better labor market outcomes and wage gains. This proposal is chapter eight of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Building Skills.

Providing Disadvantaged Workers with Skills to Succeed in the Labor Market A Hamilton Project Policy Memo June 2014 Sheena McConnell , Vice President, Mathematica Policy Research Irma Perez-Johnson, Associate Director of Human Services Research, Mathematica Policy Research Jillian Berk, Senior Researcher, Mathematica Policy Research

In this policy memo, Sheena McConnell, Irma Perez-Johnson, and Jillian Berk offer proposals to help disadvantaged adult workers with the skills necessary to succeed in the labor market. The authors call for an increase in funding in the Workforce Investment Act Adult program. They also propose a series of four steps that state and local workforce boards can take to better assist disadvantaged adult workers in obtaining skills. This proposal is chapter nine of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Building Skills.

Supporting Low-Income Workers through Refundable Child-Care Credits A Hamilton Project Policy Memo June 2014 James P. Ziliak, Gatton Endowed Chair in Microeconomics, Department of Economics and Director of Center for Poverty Research; University of Kentucky

In this policy memo, James P. Ziliak proposes converting the federal Child and Dependent Care Credit from a nonrefundable tax credit to a refundable one, capping eligibility at $70,000 and making the credit a progressive function of income, child age, and use of licensed care facilities. This proposal, targeted at low- and middle-income families with children under the age of twelve, aims to increase labor force participation, disposable income, and the use of higher-quality child care. This proposal is chapter ten of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Improving Safety Net and Work Support.

Building on the Success of the Earned Income Tax Credit A Hamilton Project Policy Memo June 2014 Hilary Hoynes, Professor of Public Policy and Economics, Haas Distinguished Chair in Economic Disparities, University of California, Berkeley In this policy memo, Hilary Hoynes proposes expanding the Earned Income Tax Credit (EITC) by raising the benefits for families with one child to be on par with the benefits for families with two children. This proposal aims to strengthen work incentives for low-income, one-child families; raise 410,000 people—including 131,000 children—out of poverty; and increase after-tax income by about $1,000 for one-child EITC beneficiaries, leading to improvements in health and children’s cognitive skills. This proposal is chapter eleven of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Improving Safety Net and Work Support.

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Encouraging Work Sharing to Reduce Unemployment A Hamilton Project Policy Memo June 2014 Katharine Abraham, Professor, Department of Economics and Joint Program in Survey Methodology, University of Maryland Susan Houseman, Senior Economist, W. E. Upjohn Institute for Employment Research In this policy memo, Katharine G. Abraham and Susan N. Houseman propose that the federal government subsidize state work-sharing payments during economic downturns, make work sharing a requirement for state unemployment insurance systems, change federal requirements to modify provisions of state work-sharing plans that may discourage employer participation, and provide states with adequate funding to administer work-sharing programs. This proposal, targeted at workers who would otherwise become unemployed during cyclical downturns, aims to reduce the number of layoffs during economic downturns. This proposal is chapter twelve of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Improving Safety Net and Work Support.

Designing Thoughtful Minimum Wage Policy at the State and Local Levels A Hamilton Project Policy Memo June 2014 Arindrajit Dube, Associate Professor of Economics, University of Massachusetts Amherst In this policy memo, Arindrajit Dube proposes that state and local governments consider median wages and local costs when setting minimum wages, index the minimum wage for inflation, and engage in regional wage setting. This proposal aims to raise the earnings of low-wage workers with minimal negative impacts on employment. This proposal is chapter thirteen of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Improving Safety Net and Work Support.

Smarter, Better, Faster: The Potential for Predictive Analytics and Rapid-Cycle Evaluation to Improve Program Development and Outcomes A Hamilton Project Policy Memo June 2014 Scott Cody, Vice President and Director of Human Services Research, Mathematica Policy Research Andrew Asher, Senior Fellow, Health Policy Division, Mathematica Policy Research In this policy memo, Scott Cody and Andrew Asher propose that federal, state, and local agencies conduct thorough needs assessments to determine if predictive analytics and rapid-cycle evaluation can be used to improve the delivery of social services programs. This proposal aims to provide more effective services for individuals living in poverty by targeting services appropriately, and by identifying effective program improvements. This proposal is chapter fourteen of The Hamilton Project’s Policies to Address Poverty in America, and a segment in Improving Safety Net and Work Support.

Ten Economic Facts about Crime and Incarceration in the United States Hamilton Project Economic Facts May 2014 Melissa S. Kearney, Director, The Hamilton Project Benjamin H. Harris, Policy Director, The Hamilton Project

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Crime and high rates of incarceration impose tremendous costs on society, with lasting negative effects on individuals, families, and communities. Rates of crime in the United States have been falling steadily, but still constitute a serious economic and social challenge. This Hamilton Project policy memo provides ten economic facts highlighting recent trends in crime and incarceration in the United States. Specifically, it explores the characteristics of criminal offenders and victims; the historically unprecedented level of incarceration in the United States; and evidence on both the fiscal and social implications of current policy on taxpayers and those imprisoned.

Think Before You Act: A New Approach to Preventing Youth Violence Dropout A Hamilton Project Discussion Paper May 2014 Jens Ludwig, McCormick Foundation Professor of Social Service Administration, Law, and Public Policy, School of Social Service Administration and the Harris School; Director, University of Chicago Crime Lab Anuj Shah, Assistant Professor of Behavioral Science and Neubauer Family Faculty Fellow, University of Chicago Improving the long-term life outcomes of disadvantaged youths remains a top policy priority in the United States. Unfortunately, long-term progress in improving outcomes like high school graduation rates and reduction of violent crime has been limited, partly because finding ways to successfully improve outcomes for disadvantaged youths (particularly males) has proven to be challenging. In this paper, Jens Ludwig and Anuj Shah propose a five-year strategy for scaling out behaviorally informed interventions—such as the "Becoming a Man" (BAM) program —to help disadvantaged youths recognize high-stakes situations in which their automatic responses could be maladaptive and may lead to trouble.

A New Approach to Reducing Incarceration While Maintaining Low Rates of Crime A Hamilton Project Discussion Paper May 2014 Steven Raphael, Professor of Public Policy, University of California, Berkeley Michael Stoll, Professor and Chair of Public Policy, UCLA Luskin School of Affairs The United States incarcerates people at a higher rate than any other country in the world. Large increases in the U.S. incarceration rate over the past three decades are costly in terms of explicit expenditures, as well as in terms of the collateral social consequences for those who serve time and for the communities from which they come. Increases in incarceration rates do reduce crime. In this paper, the authors argue that states should reevaluate their policy choices and reduce the scope and severity of several of the sentencing practices that they have implemented over the past twenty-five or thirty years. They propose that states introduce a greater degree of discretion into their sentencing and parole practices through two specific reforms: (1) a reduction in the scope and severity of truth-in-sentencing laws that mandate that inmates serve minimum proportions of their sentences, and (2) a reworking and, in many instances, abandonment of mandatory minimum sentences. They also propose that states create incentives for localities to limit their use of state prison systems.

Unlocking Spectrum Value through Improved Allocation, Assignment, and Adjudication of Spectrum Rights A Hamilton Project Discussion Paper March 2014 J. Pierre de Vries, Senior Adjunct Fellow and Co-Director of the Spectrum Policy Initiative, Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado, Boulder Phil J. Weiser, Dean, University of Colorado Law School

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Technological developments have continued to increase the importance of radio spectrum, with citizens, companies, and government users increasing their use of wireless-enabled services of all kinds, from smartphone apps to satellite navigation. This Hamilton Project discussion paper describes the importance of moving toward a more economically efficient system for managing the use of wireless spectrum, and proposes three concrete policy steps to move us closer to such a system.

The Economic Promise of Wireless Spectrum A Hamilton Project Framing Paper March 2014 Melissa S. Kearney, Director, The Hamilton Project Benjamin H. Harris, Policy Director, The Hamilton Project

A founding principle of The Hamilton Project’s economic strategy is that long-term prosperity is best achieved by fostering economic growth and broad participation in that growth in a changing global economy. One important way to fulfill the goals of this strategy is to encourage the efficient use of our nation’s resources to maximize economic growth and to foster innovation. In this policy memo, The Hamilton Project considers the economic challenge of more-efficient assignment of wireless spectrum, which is critical to our modern information economy, as well as to national security, defense, and first responders.

2013 A Dozen Facts about America’s Struggling Lower-Middle Class Hamilton Project Economic Facts December 2012 Melissa S. Kearney, Director, The Hamilton Project Benjamin H. Harris, Policy Director, The Hamilton Project

This set of economic facts highlights struggling lower-middle-class families by focusing on two key challenges: food insecurity, and the low return to work for struggling lower-middle-class families who lose tax and transfer benefits as their earnings increase. These facts highlight the critical role of federal tax and transfer programs in providing income support to families struggling to remain out of poverty.

Giving Secondary Earners a Tax Break: A Proposal to Help Low- and Middle-Income Families A Hamilton Project Discussion Paper December 2013 Melissa S. Kearney, Director, The Hamilton Project Lesley Turner, Assistant Professor, University of Maryland

The current structure of the tax and transfer system in the United States makes it particularly challenging for low-income married couples with children to work their way into the middle class. Specifically, the tax and transfer system has an inherent secondary- earner penalty that discourages work efforts and reduces the return to work for a second earner within a married couple. When children are present, a spouse’s work efforts often brings associated child-care costs, making the return to work even lower. In this new discussion paper the authors suggest that under the current federal tax and transfer system, and assuming standard child-care costs, a family headed by a primary earner making $25,000 a year will take home less than 30 percent of a spouse’s earnings. They propose a secondary- earner deduction for low- to moderate-income families that would increase disposable income for affected families.

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Strengthening SNAP for a More Food-Secure, Healthy America

A Hamilton Project Discussion Paper

December 2013

Diane Whitmore Schanzenbach, Associate Professor, School of Education and Social Policy, Northwestern

University

The Supplemental Nutrition Assistance Program (SNAP) is the fundamental safety-net program in the United States. Over its fifty-year history, it has effectively reduced hunger and buffered American families against economic downturns. In this new discussion paper the author proposes to subsidize healthy foods in order to encourage better nutrition among SNAP recipients and to reform eligibility and payment rules to enable SNAP to better fight hunger and support program beneficiaries.

Loans for Educational Opportunity: Making Borrowing Work for Today’s Students A Hamilton Project Discussion Paper October 2013 Susan Dynarski, Professor of Education, Public Policy and Economics, University of Michigan Daniel Kreisman, Postdoctoral Research Fellow, University of Michigan

Borrowing for college has risen for decades, and today 7 million of these student loans are in default. Yet the cost of borrowing is far lower than the lifetime payoff to college, which is estimated to be hundreds of thousands of dollars. In this paper, the authors propose a better model of loan repayment. A single, simple, income-based repayment system called Loans for Educational Opportunity (LEO) will replace the current, bewildering array of repayment options. Student-loan payments will automatically rise and fall with a borrower’s earnings, just as contributions to Social Security rise and fall. A fraction of earnings will be deducted from each paycheck, with a larger fraction taken when incomes are high and a smaller fraction when incomes are low.

Redesigning the Pell Grant Program for the Twenty-First Century A Hamilton Project Discussion Paper October 2013 Sandy Baum, Senior Fellow, Urban Institute; Research Professor, The George Washington University Graduate School of Education and Human Development Judith Scott-Clayton, Assistant Professor of Economics and Education, Teachers College, Columbia University Since its inception in 1972, the Pell Grant program has expanded dramatically in size and scope. Yet the structure of the program—a one-size-fits-all voucher originally designed for recent high school graduates from poor families—has remained fundamentally unchanged. In this paper, the authors propose three major structural reforms. First, they propose to augment the Pell program’s financial support with tailored guidance and support services that have been shown to improve academic and/or labor-market success, including separately tailored services for the distinctive circumstances of dependent and independent recipients. Second, they propose to dramatically simplify the eligibility and application process to ensure that the program reaches those who need it most, again tailoring the simplification to the distinctive circumstances of dependent and independent students. Finally, they propose several modifications to strengthen incentives for student effort and timely completion, without leading the program away from its core need-based (not merit-based) mission.

Simplifying Estimates of College Costs A Hamilton Project Discussion Paper October 2013 Phillip B. Levine, A. Barton Hepburn and Katharine Coman Professor of Economics, Wellesley College; Research Associate, National Bureau of Economic Research

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This paper proposes an extension of Wellesley College’s recently introduced Quick College Cost Estimator to other higher education institutions. The estimator is designed to overcome the sticker shock that many students experience when the only price of attendance they know is the stated level of tuition. The lack of information regarding the true cost of attendance often acts as a major impediment for students in the college decision-making process. The purpose of the estimator is to provide greater clarity regarding the true cost of attendance, increasing access for students from families that are less affluent. The ultimate goal is to allow students and their families to make more-informed choices about where they should apply to college.

Informing Students about Their College Options: A Proposal for Broadening the

Expanding College Opportunities Project A Hamilton Project Discussion Paper June 2013 Caroline Hoxby, Scott and Donya Bommer Professor of Economics, Stanford University Sarah Turner, University Professor of Economics and Education, University of Virginia Most high-achieving, low-income students do not even apply to selective colleges despite being highly qualified for admission and success at these institutions. Because they do not apply, these students forgo the generous academic resources, increased financial aid, and better collegiate and career opportunities that selective schools offer. To increase opportunities and improve outcomes for these students, the authors propose building on the success of an innovative intervention, the Expanding College Opportunities (ECO) Project. At a relatively low cost of about $6 per student contacted, ECO sent the following to high-achieving, low-income students: targeted and personalized information on their college options, information on the process for applying, and details of the financial information relevant to their situations. This paper proposes steps to expand and improve ECO to reach more low-income, high-achieving students across the country by partnering with respected third-party organizations such as the College Board and ACT.

Thirteen Economic Facts About Social Mobility and the Role of Education Hamilton Project Economic Facts June 2013 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution; Professor, Massachusetts Institute of Technology Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution Jeremy Patashnik, Research Assistant, The Hamilton Project Muxin Yu, Special Assistant, The Hamilton Project It is well known that the income divide in the United States has increased substantially over the last few decades, a trend that is particularly true for families with children. What is less well known, however, is that mounting evidence hints that the forces behind these divergent experiences are threatening the upward mobility of the youngest Americans. This Hamilton Project policy memo provides thirteen economic facts on the growth of income inequality and its relationship to social mobility in America; on the growing divide in educational opportunities and outcomes for high- and low-income students; and on the pivotal role education can play in increasing the ability of low-income Americans to move up the income ladder.

Using Data to Improve the Performance of Workforce Training A Hamilton Project Discussion Paper April 2013 Louis S. Jacobson, President, New Horizons Economic Research Robert J. LaLonde, Professor, Harris School of Public Policy, University of Chicago

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Workforce training programs have the potential to improve the lives and incomes of millions of Americans by lifting many into the middle class and preventing others from falling out of it. Despite their promise, however, too many workers enroll in courses that they do not complete or complete courses that do not lead to better jobs, reducing the benefits to workers and the economic return to workforce investments. In this paper, the authors propose a competition to increase the return on training investments by developing the data and measures necessary to provide the information prospective trainees need, by presenting the information in user-friendly “report cards,” by providing help for prospective trainees to use the information effectively, and by creating incentives for states to implement permanent information systems once they prove cost-effective.

Building on Recent Advances in Evidence-Based Policymaking A Hamilton Project Discussion Paper April 2013 Jeffrey B. Liebman, Malcolm Wiener Professor of Public Policy, John F. Kennedy School of Government, Harvard University Over the past decade, and particularly over the past five years, new government strategies have begun to emerge—at the federal, state, and local levels—that offer the potential of simultaneously making better use of taxpayer dollars and speeding up progress in addressing serious social problems. In this paper, the author discusses several of these strategies and outlines five steps that policymakers can take to better inform their work with evidence. He also proposes a grant competition that identifies and encourages innovation in ten social policy priority areas as well as federal support for state and local Pay for Success initiative

Transitioning to Bundled Payments in Medicare A Hamilton Project Policy Memo February 2013 Michael Chernew, Professor, Department of Health Care Policy, Harvard Medical School Dana Goldman, Professor and the Norman Topping Chair in Medicine and Public Policy, University of Southern California The core challenge for the health-care system in general— and for care financed by the federal government through Medicare—is how to reduce inefficient spending while continuing to improve the quality of care. The fee for service (FFS) system, as currently practiced, is at the heart of this challenge, particularly for Medicare, because it is focused on providing and paying for medical services rather than on promoting and incentivizing medical outcomes. In this policy memo, the authors suggest three proposals for transitioning away from FFS payment to a global payment model. These changes are designed to promote efficiency in the Medicare program and facilitate the ability of health-care providers to continue to improve the quality of care, but along a dramatically slower spending trajectory. This proposal is chapter one of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in An Enduring Social Safety Net.

Reforming Federal Support for Risky Development A Hamilton Project Policy Memo February 2013 David R. Conrad, Water Resources Policy Consultant Edward A. Thomas, President, Natural Hazard Mitigation Association

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Within the past decade, citizens of the United States have experienced a series of devastating natural disasters, including Hurricanes Sandy, Katrina, and Rita; the tornado outbreaks of 2011 and 2012; and an annual slew of increasingly destructive wildfires. In this policy memo, the authors explore how the National Flood Insurance Program and other federal disaster relief programs could be reformed to better align the costs and benefits of living in disaster-prone areas and help put the budget on more sound footing. This proposal aims to reduce budget costs of natural disasters and reduce risk to life and property of Americans living in disaster-prone areas. This proposal is chapter two of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in An Enduring Social Safety Net.

Restructuring Cost Sharing and Supplemental Insurance for Medicare A Hamilton Project Policy Memo February 2013 Jonathan Gruber, Professor of Economics, Massachusetts Institute of Technology Cost sharing under the Medicare Parts A & B programs is both variable and uncapped, with an overall structure that is hard to rationalize. In this policy memo, the author presents a proposal to address these shortcomings with the existing Medicare cost-sharing structure. The author proposes a new cost-sharing structure within Medicare that will provide more protection to elders than the existing program, and will save many of them money by removing the costs of supplemental coverage. This proposal is chapter three of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in An Enduring Social Safety Net.

An Evidence-Based Path to Disability Insurance Reform A Hamilton Project Policy Memo February 2013 Jeffrey B. Liebman, Malcolm Wiener Professor of Public Policy, John F. Kennedy School of Government, Harvard University Jack A. Smalligan Americans who are between the ages of fifty and sixty-five are four times more likely than those between the ages of twenty and forty-nine to be receiving disability insurance benefits. Even though the fiscal burden of disability insurance is not expected to worsen, the program is in significant need of reform. In this policy memo, the authors propose a path to improve our disability insurance system, through demonstration projects and administrative changes, that could potentially increase employment and economic engagement among workers with disabilities and provide more rapid and reliable resolution of disability insurance claims for those who cannot work. This proposal is chapter four of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in An Enduring Social Safety Net.

Eliminating Fossil Fuel Subsidies A Hamilton Project Policy Memo February 2013 Joseph E. Aldy, Assistant Professor of Public Policy, Harvard Kennedy School

This proposal calls for eliminating twelve tax provisions that subsidize the production of fossil fuels in the United States. Implementing this proposal will contribute to a leveling of the playing field among oil and gas companies, since independent producers enjoy greater tax benefits than the oil majors, and will promote the efficiency in allocating capital across the U.S. economy. This proposal complements other proposals to simplify the corporate tax code, and thus could facilitate the political support necessary to enact a simpler, more efficient corporate tax code. In addition, removing U.S. fossil fuel subsidies would enable the U.S. government to make the case more effectively that large developing countries (such as China, India, and energy exporters) should phase out their fossil fuel consumption subsidies that contribute to higher oil prices in the United States. This proposal is chapter five of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in Innovative Approaches to Tax Reform.

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Better Ways to Promote Saving through the Tax System A Hamilton Project Policy Memo February 2013 Karen Dynan, Vice President & Co-Director of Economic Studies, Senior Fellow, The Brookings Institution

The U.S. personal saving rate has declined dramatically over the past several decades and is currently very low by historical standards. Americans saved about 4 percent of after-tax personal income in 2012, down from average saving rates of 5.5 percent in the 1990s, 8.6 percent in the 1980s, and 9.6 percent in the 1970s. In this paper, the author examines the design of government incentives for personal savings, outlining how reforms to these programs would improve saving and economic security for low-income households and reduce expensive and ineffective federal subsidies for high-income households. This proposal is chapter six of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in Innovative Approaches to Tax Reform.

Limiting Individual Income Tax Expenditures A Hamilton Project Policy Memo February 2013 Diane M. Lim, Chief Economist, Pew Charitable Trusts

It is often said that base-broadening tax reform—that is, expanding the definition of taxable income—should be an important part of solutions to address the fiscal trilemma of reducing the deficit, promoting fairness, and encouraging economic growth. Such reform would be expected to garner bipartisan support, but getting policymakers to move from that vague sound bite to specific policy proposals, without the usual ideological bickering, is another story. In this paper I argue why an across-the-board reduction in broad classes of individual income tax preferences, rather than targeting certain tax expenditures within a comprehensive overhaul of the tax system, could be an easy step to ensure we achieve our nation’s fiscal and economic goals, despite our seemingly dysfunctional political system. Indeed, if implemented correctly, base-broadening reform could raise tax revenues by more than $1 trillion over the next decade. This proposal is chapter seven of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in Innovative Approaches to Tax Reform.

Replacing the Home Mortgage Interest Deduction A Hamilton Project Policy Memo February 2013 Alan D. Viard, Resident Scholar, American Enterprise Institute

The federal tax treatment of owner-occupied housing cries out for reform. Current tax policy offers unwarranted subsidies for the purchase of expensive homes by high-income taxpayers, but does little to promote homeownership by those of more modest means. To address these problems, I propose to replace the mortgage interest deduction with a 15 percent refundable credit and to reduce the size of the mortgages eligible for the credit while providing transition relief. Although this proposal is not ideal in every respect, it offers an effective way to scale back and better target the tax system’s housing tax breaks while raising revenue in a progressive manner. Over ten years, such a proposal could increase revenues by approximately $300 billion. This proposal is chapter eight of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in Innovative Approaches to Tax Reform.

Funding Transportation Infrastructure with User Fees A Hamilton Project Policy Memo February 2013 Jack Basso, Chief Operating Office, American Association of State Highway and Transportation Officials Tyler Duvall, Associate Principal, McKinsey & Company

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Federal surface transportation programs are intended to improve the quality, utility, and productivity of the surface transportation system by enhancing the system's safety and operating performance; and by reducing the environmental impact of surface transportation. Tyler Duvall and Jack Basso suggest looking to user fees as a way to raise revenues, reduce congestion on major roadways, reduce pollution, and promote wiser infrastructure investments. This proposal is chapter nine of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in New Sources of Revenue and Efficiency.

Creating an American Value-Added Tax A Hamilton Project Policy Memo February 2013 William G. Gale, Arjay and Frances Miller Chair in Federal Economic Policy, The Brookings Institution Benjamin H. Harris, Senior Research Associate, Urban Institute and Urban-Brookings Tax Policy Center Creating a value-added tax (VAT) in the United States could raise revenue in a manner that does not distort saving and investment choices. William Gale and Ben Harris consider how a VAT could be designed to help address the nation’s fiscal challenges. This proposal is chapter ten of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in New Sources of Revenue and Efficiency.

The Many Benefits of a Carbon Tax A Hamilton Project Policy Memo February 2013 Adele Morris, Fellow and Policy Director, Climate and Energy Economics, Brookings Institution

This paper proposes introducing a modest carbon tax to finance reforms to the U.S. tax system to promote economic growth, reduce budget deficits, reduce redundant and inefficient regulation, reduce unnecessary subsidies, and reduce the costs associated with climate change. The revenues from the new levy could fund permanent reductions in more distortionary taxes on capital income while also contributing to deficit

reduction. This proposal is chapter eleven of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and

a segment in New Sources of Revenue and Efficiency.

Overhauling the Temporary Work Visa System A Hamilton Project Policy Memo February 2013 Pia Orrenius, Assistant Vice President and Senior Economist, Federal Reserve Bank of Dallas Giovanni Peri, Professor of Economics, University of California, Davis Madeline Zavodny, Professor of Economics, Agnes Scott College Immigration creates economic value and potential fiscal revenues when workers move from countries where their productivity and wages are low to countries, such as the United States, where their productivity and wages are relatively high. Unfortunately, the complex and outdated U.S. immigration system, even in its employment-based component, imposes significant inefficiencies and costly restrictions on the inflow of foreign-born workers. In this paper the authors present a strategy to change the U.S. employment-based immigration system to make the system more efficient, increase the economic benefits of immigration and raise revenues by using market-based auctions to allocate visas. This proposal is chapter twelve of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in New Sources of Revenue and Efficiency.

Increasing the Role of the Private Sector in Housing Finance A Hamilton Project Policy Memo February 2013 Phillip L. Swagel, Professor, School of Public Policy, University of Maryland

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This policy memo proposes reforms of the U.S. housing finance system to increase the role of private capital in funding housing, reduce taxpayer exposure to housing risk, sell off the government stakes in the mortgage finance firms of Fannie Mae and Freddie Mac, and charge appropriate premiums for secondary insurance provided by the U.S. government on housing securities. These measures would generate revenues for the federal government, improve the allocation of capital within the U.S. economy, and focus governmental assistance for affordable housing on those most in need. This proposal is chapter thirteen of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in New Sources of Revenue and Efficiency.

National Defense in a Time of Change A Hamilton Project Policy Memo February 2013 Adm. Gary Roughead (USN Ret.), Annenberg Distinguished Visiting Fellow, Hoover Institution Kori Schake, Research Fellow, Hoover Institution In response to likely cuts to the defense budget, Gary Roughead and Kori Schake propose restructuring the force to improve the military’s ability to respond to modern challenges, making military procurement of assets more efficient and competitive, and creating benefits packages more in line with troops’ preferences. This proposal is chapter fourteen of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in Budgeting for a Modern Military.

Making Defense Affordable A Hamilton Project Policy Memo February 2013 Cindy Williams, Principal Research Scientist, Security Studies Program, Massachusetts Institute of Technology The paper also identifies two options for reshaping U.S. military forces in a way that would reduce future budgets while keeping a strong and ready military. It explores the capabilities of the forces under those options and the missions for which they would be suited. This proposal is chapter fifteen of The Hamilton Project’s 15 Ways to Rethink the Federal Budget, and a segment in Budgeting for a Modern Military.

2012 A Dozen Economic Facts About K-12 Education Hamilton Project Economic Facts September 2012 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution; Professor, Massachusetts Institute of Technology Max Harris, Research Assistant, The Hamilton Project Karen Li, Policy Coordinator/Senior Research Assistant, The Hamilton Project Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution Jeremy Patashnik, Research Assistant, The Hamilton Project

Education is a powerful force for promoting opportunity and growth. It is not surprising that an individual’s educational attainment is highly correlated with her income: college graduates generally earn more than less-educated Americans. This set of economic facts help illustrate the state of educational attainment in the United States and the growing importance of education in determining people's well-being. On many dimensions—lifetime earnings, incarceration rates, and life expectancy, to name a few—Americans who do not graduate from high school or college are increasingly falling behind those with a college degree. This paper explores both the condition of education in the United States and the economic evidence on several promising K-12 interventions that could improve the lives of Americans.

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Learning from the Successes and Failures of Charter Schools A Hamilton Project Discussion Paper September 2012 Roland Fryer, Jr., Robert M. Beren Professor of Economics, Harvard University; Faculty Director, EdLabs Our education system is in desperate need of innovation. Despite radical advances in nearly every other sector, public school students continue to attend school in the same buildings and according to the same schedule as students did more than a hundred years ago, and performance is either stagnant or worsening. In this paper, the authors examine charter schools across the quality spectrum in order to learn which practices separate high-achieving from low-achieving schools. An expansive data collection and analysis project in New York City charter schools yielded an index of five educational practices that explains nearly half of the difference between high- and low-performing schools. They then draw on preliminary evidence from demonstration projects in Houston and Denver and find the effects on student achievement to be strikingly similar to those of many high-performing charter schools and networks.

Harnessing Technology to Improve K-12 Education A Hamilton Project Discussion Paper September 2012 Aaron Chatterji, Associate Professor, Fuqua School of Business, Duke University Benjamin F. Jones, Associate Professor, Kellogg School of Management, Northwestern University Technological progress has consistently driven remarkable advances in the U.S. economy, yet K–12 education sees little technological change compared to other sectors, even as U.S. K–12 students increasingly lag behind students in other nations. This proposal considers how we can take a signature American strength—innovation—and apply it to K–12 education. We argue that the advent of Common Core State Standards (CCSS) and broadband Internet create promising opportunities for developing new learning technologies but that a fundamental obstacle remains: the effectiveness of learning technologies is rarely known. Not surprisingly, when no one knows what works, schools are unlikely to buy, and innovators are unlikely to create. Our proposed EDU STAR system will solve this problem by (a) undertaking rapid, rigorous, and low-cost evaluations of learning tools and (b) reporting results to the public.

Staying in School: A Proposal to Raise High School Graduation Rates A Hamilton Project Discussion Paper September 2012 Philip Oreopoulos, Professor of Economics and Public Policy, University of Toronto Derek Messacar, Ph.D. Candidate, Department of Economics, University of Toronto This paper presents a plan to increase the high school graduation rate. A key element of the proposal is for all states to increase their minimum school-leaving age to eighteen. In many studies, this intervention has been found to have a significant positive impact on several long-term outcomes. The proposal also calls for more resources for enforcement of new and existing compulsory-schooling laws, to maximize the impact of the policy change. More effort is also needed to keep students engaged in school, even at an early age. If states invest in effective support programs, they can further increase graduation rates and reduce future costs of enforcing compulsory-schooling policies. All of these interventions should be implemented with the goal of strengthening America’s primary education system to promote college attendance and improve career outcomes among America’s youth.

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Energy Policy Opportunities and Continuing Challenges in the Presence of Increased Supplies of Natural Gas and Petroleum A Hamilton Project Framing Paper June 2012 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution; Professor, Massachusetts Institute of Technology Dmitri Koustas, Senior Research Assistant, The Hamilton Project Karen Li, Research Assistant, The Hamilton Project Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution Harrison Marks, Intern, The Hamilton Project This framing paper provides a summary of some of the recent changes in the energy sector, tallies the benefits and costs, and speculates about the changes yet to come. It also introduces three new discussion papers written for The Hamilton Project that aim to harness the opportunities that the technological advances in the recovery of natural gas offer, while managing the risks. It then assesses the energy challenges that continue to confront the United States, and reiterates four principles for sound energy and environmental policy developed in The Hamilton Project’s paper, “A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs” (Greenstone and Looney 2011). Finally, it introduces a fifth principle motivated by the vast increase in the supplies of natural gas and petroleum in the United States.

Modernizing Bonding Requirements for Natural Gas Producers A Hamilton Project Discussion Paper June 2012 Lucas Davis, Associate Professor of Economic Analysis and Policy, Haas School of Business, University of California, Berkeley This proposal would increase federal minimum bond amounts to adjust for inflation and encourage states to adopt similar minimum bond amounts for drilling on non-federal land. In addition, this proposal would eliminate provisions that currently allow companies to meet bonding requirements by posting a single “blanket” bond. Stronger bonding requirements would help ensure that funds would be available to clean up sites when accidents occur. But more importantly, stronger requirements would also incentivize producers to work hard to avoid environmental damages in the first place.

Leveling the Playing Field for Natural Gas in Transportation A Hamilton Project Discussion Paper June 2012 Christopher R. Knittel, William Barton Rogers Professor of Energy Economics, Sloan School of Management, Massachusetts Institute of Technology This paper presents a pair of policy proposals designed to increase the nation’s energy security, decrease the susceptibility of the U.S. economy to recessions caused by oil-price shocks, and reduce greenhouse gas emissions and other pollutants. First, I propose improving the natural gas fueling infrastructure in homes, at local distribution companies, and along long-haul trucking routes. Second, I offer steps to promote the use of natural gas vehicles and fuels.

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A Strategy for U.S. Natural Gas Exports A Hamilton Project Discussion Paper June 2012 Michael Levi, David M. Rubenstein Senior Fellow for Energy and the Environment, Council on Foreign Relations; Director of the Program on Energy Security and Climate Change, Council on Foreign Relations This paper proposes a framework for assessing the merits of allowing LNG exports along six dimensions: macroeconomic (including output, jobs, and balance of trade), distributional, oil security, climate change, foreign and trade policy, and local environment. Evaluating the possibility of exports along all six dimensions, it finds that the likely benefits of allowing exports outweigh the costs of explicitly constraining them, provided that appropriate environmental protections are in place. It thus proposes that the DOE and the Federal Energy Regulatory Commission (FERC) approve applications to export natural gas. It also proposes steps that the United States should take to leverage potential exports in order to promote its broader trade and foreign policy agendas.

The U.S. Immigration System: Potential Benefits of Reform A Hamilton Project Framing Paper May 2012 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution; Professor, Massachusetts Institute of Technology Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution Harrison Marks, Intern, The Hamilton Project The United States is a nation of immigrants. Throughout U.S. history, immigrants have settled the country, contributed to America’s intellectual environment, vibrant culture, national defense, and economic productivity, and so much more. For years, U.S. immigration policy has fulfilled many goals by reuniting Americans with their families from abroad, providing safe harbor for the persecuted from around the world, enriching economic activity, and, ultimately, strengthening our quality of life, academic excellence, culture, and society. For these reasons, The Hamilton Project has focused its attention on the economic effects of immigration—and, specifically, the often-misunderstood facts underpinning the debate (see Greenstone and Looney 2010).

Rationalizing U.S. Immigration Policy: Reforms for Simplicity, Fairness, and Economic Growth A Hamilton Project Discussion Paper May 2012 Giovanni Peri, Professor of Economics, University of California, Davis This paper proposes market-based reforms to our immigration system to tie employment-based inflows to labor market demand. A goal of the proposal is to create an immigration system that is easier to operate and simpler to navigate for employers, foreignborn workers, and their families, and that increases the economic benefits of employment-based immigration for the U.S. economy. The economic consensus is that, taken as a whole, immigrants raise living standards for American workers by boosting demand and increasing productivity, contributing to innovation, and lowering prices—while also improving their own wellbeing and that of their families. The proposed system uses market-based auctions to allocate employment-based permits to employers and visas to immigrants that have the greatest propensity to contribute to economic activity and thus to generate the largest benefits for the U.S. economy.

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A Dozen Economic Facts About Tax Reform Hamilton Project Economic Facts May 2012 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution; Professor, Massachusetts Institute of Technology Dmitri Koustas, Senior Research Assistant, The Hamilton Project Karen Li, Research Assistant, The Hamilton Project Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution Leslie B. Samuels, Senior Partner, Cleary Gottlieb Steen & Hamilton LLP Taxes and tax policy are on the table for discussion. Policymakers continue to look at tax cuts— most recently, the payroll tax cut and reductions for small business—as instruments for aiding the nation’s economic recovery. And, fiscal issues will continue to dominate the policy agenda as the federal government faces the expiration of the Bush-era tax cuts, the onset of the deficit “trigger,” and another debate over the debt limit—all colliding at the end of 2012. To further complicate these challenges, today’s tax reform debates are often based on misconceptions or lack good evidence. To that end, The Hamilton Project aims to provide a series of facts that can help ground the policy discussion. They are presented in the spirit of the late U.S. Senator Daniel Patrick Moynihan’s famous saying, “Everyone is entitled to his own opinions, but not to his own facts.”

2011 Building America’s Job Skills with Effective Workforce Programs: A Training Strategy to Raise Wages and Increase Work Opportunities A Hamilton Project Strategy Paper November 2011 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution; Professor, Massachusetts Institute of Technology Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution Paige Shevlin, Associate Policy Director, The Hamilton Project This paper discusses the importance of effective training and workforce development programs as part of a broader strategy to increase the competitiveness of American workers. Although rapid technological change and increasing global competition have delivered great economic benefits to the U.S. economy overall, the development of new and more productive industries has caused some Americans to experience significant declines in their earnings and job prospects; the Great Recession exacerbated these longer-term trends. Workers with less education and those who have been displaced from long-tenured jobs face particular challenges, and effective job training programs are an important component of policies to help these workers. The Hamilton Project proposes two general principles that can guide policy-makers in improving training programs to aid American workers: 1) training funds should be directed to programs with a track record of success in improving earnings for the specific target population and to those workers who can benefit the most from those programs; and 2) training programs should directly engage employer and industry partners, or actively guide students to career-specific training.

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Policies to Reduce High-Tenured Displaced Workers’ Earnings Losses Through Retraining A Hamilton Project Discussion Paper November 2011 Louis S. Jacobson, President, New Horizons Economic Research Daniel G. Sullivan, Executive Vice President and Director of Research, Federal Reserve Bank of Chicago Robert J. LaLonde, Professor, Harris School of Public Policy, University of Chicago High-tenured displaced workers often experience significant earnings losses that persist for the rest of their working lives. A well-targeted training initiative has the potential to substantially reduce permanent earnings losses for those displaced workers who have the academic preparation, work experience, and interest to complete high-return retraining, with a rate of return on par with, if not larger than, that reported for formal schooling of young people. Current governmental training programs do not provide adequate resources to finance the long-term training needed by displaced workers to meaningfully offset their losses, nor do they provide the right incentives to get longer-term retraining. This paper presents five comprehensive reforms targeted specifically at retraining displaced workers experiencing significant earnings loss: (1) establish a Displaced Worker Training (DWT) Program to provide sizeable grants for longer-term training; (2) use honest brokers to assess and counsel grantees; (3) provide incentives and performance standards for participants and institutions; (4) evaluate training programs and disseminate best practices; and (5) shore up community colleges’ capacity to provide high-quality training, especially during tough economic times.

Raising Job Quality and Skills for American Workers: Creating More-Effective Education and Workforce Development Systems in the States A Hamilton Project Discussion Paper November 2011 Harry J. Holzer, Professor of Public Policy, Georgetown University

To improve the employment rates and earnings of Americans workers, we need to create more coherent and more-effective education and workforce development systems, focusing primarily (though not exclusively) on disadvantaged youth and adults, and with education and training more clearly targeted towards firms and sectors that provide good-paying jobs. This paper proposes a new set of competitive grants from the federal government to states that would fund training partnerships between employers in key industries, education providers, workforce agencies, and intermediaries at the state level, plus a range of other supports and services. The grants would especially reward the expansion of programs that appear successful when evaluated with randomized controlled trial (RCT) techniques.

Improving Student Outcomes: Restoring America’s Education Potential A Hamilton Project Strategy Paper September 2011 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution;

Professor, Massachusetts Institute of Technology Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution Paige Shevlin, Associate Policy Director, The Hamilton Project In this paper, The Hamilton Project provides a dual-track approach to improving future educational outcomes: 1) tackling structural barriers to unlock the largest gains in student achievement and 2) in the near term, implementing relatively simple cost-effective reforms that improve student performance. The first approach examines opportunities for structural changes to America’s educational system—a new way of doing business. These include generalizing the best practices of top performing charter schools and changing the current systems for identifying, hiring, and retaining highly-effective teachers.

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The Power and Pitfalls of Education Incentives A Hamilton Project Discussion Paper September 2011 Bradley M. Allan, Project Manager, Education Innovation Laboratory, Harvard University Roland Fryer, Jr., Robert M. Beren Professor of Economics, Harvard University; Chief Executive Officer, EdLabs There is widespread agreement that America’s school system is in desperate need of reform, but many educational interventions are ineffective, expensive, or difficult to implement. Incentives for inputs, such as doing homework or reading books, produced modest gains and might have positive returns on investment, and thus provide the best direction for future programs. Additionally, this paper proposes directions for future incentive programs and concludes with implementation guidelines for educators and policymakers to implement incentive programs based on the experiments’ research findings and best practices. Incentive programs are not enough to solve all the problems in America’s educational system, but they can definitely play a role in the larger solution.

Organizing Schools to Improve Student Achievement: Start Times, Grade Configurations, and Teacher Assignments A Hamilton Project Discussion Paper September 2011 Brian A. Jacob, Walter H. Annenberg Professor of Education Policy & Professor of Economics, Gerald R. Ford School

of Public Policy, University of Michigan Jonah E. Rockoff, Sidney Taurel Associate Professor of Business, Columbia Business School In this paper, the authors describe three organizational reforms that recent evidence suggests have the potential to increase K–12 student performance at modest costs: (1) Starting school later in the day for middle and high school students; (2) Shifting from a system with separate elementary and middle schools to one with schools that serve students in kindergarten through grade eight; (3) Managing teacher assignments with an eye toward maximizing student achievement (e.g. allowing teachers to gain experience by teaching the same grade level for multiple years or having teachers specializing in the subject where they appear most effective).

New Assessments for Improved Accountability A Hamilton Project Discussion Paper September 2011 Derek Neal, Professor in Economics, University of Chicago Over the past decade, educational reforms have increased efforts to hold teachers and schools accountable for student test scores. Schools without significant progress on test scores have been subject to reductions in funding and even replacement of school leadership. In this paper, Derek Neal of the University of Chicago outlines a plan to create better assessments and accountability systems to avoid these perverse incentives. The new assessment system would use two different styles of examinations: one traditional test to evaluate student achievement, and a new examination to evaluate teacher performance. Neal provides guidelines for the development of this innovative approach to assessment and details how teacher performance can be measured using a relative scale.

A Dozen Economic Facts About Innovation Hamilton Project Economic Facts August 2011 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution;

Professor, Massachusetts Institute of Technology Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution

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During the last century, medical, technical, and business innovations have driven economic growth, increased wages, and improved living standards in the United States. In recent years, however, those gains have stagnated. The Hamilton Project examines the role of innovation in driving the U.S. economy, including its historical importance, the current pace of growth, and opportunities for investments to benefit America’s future.

A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs A Hamilton Project Strategy Paper May 2011 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution;

Professor, Massachusetts Institute of Technology Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution In this paper, The Hamilton Project provides four principles for reforming America’s energy policies. First, a level playing field requires that the full costs of different energy sources be priced. Second, basic research, development, and demonstration are essential for energy innovation, but government funding is required for critical investments that the private sector does not have the incentives to undertake. Third, environmental regulations should be designed and implemented as efficiently as possible. Finally, climate change, as a problem of global scope, should be addressed on a global scale.

Promoting Clean Energy in the American Power Sector A Hamilton Project Discussion Paper May 2011 Joseph E. Aldy, Assistant Professor of Public Policy, Harvard Kennedy School This paper proposes a standard that would lower carbon dioxide emissions by as much as 60 percent relative to 2005 levels over twenty years, streamline the fragmented regulatory system that is currently in place, generate fiscal benefits, and help fund energy innovation. Through a simple design and transparent implementation, the National Clean Energy Standard would provide certainty about the economic returns to clean energy that would facilitate investment in new energy projects and lower the emission intensity of the power sector. It would also serve as an ambitious bridge to economy-wide energy and climate policy.

An Energy Technology Corporation Will Improve the Federal Government’s Efforts to Accelerate Energy Innovation A Hamilton Project Discussion Paper May 2011 John M. Deutch, Institute Professor, Massachusetts Institute of Technology Energy innovation is critical to solving many of the energy and environmental challenges we face today, from reducing the risks of climate change to lowering the costs of alternative energy sources. This paper proposes a series of best practices for government support of U.S. technology demonstration and a new institution, the Energy Technology Corporation, that would be responsible for managing and selecting technology demonstration projects. A well-designed technology demonstration program carried out by an organization with the appropriate authority, tools, and expertise would go a long way towards accelerating the process of energy innovation.

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A Better Approach to Environmental Regulation: Getting the Costs and Benefits Right A Hamilton Project Discussion Paper May 2011 Ted Gayer, Co-Director, Economic Studies, The Brookings Institution Cost-benefit analysis of environmental regulation plays a key role in determining how to achieve our environmental goals without imposing unnecessary costs on the economy. This paper proposes three reforms that address several problems that undermine the role played by cost-benefit analysis in environmental regulation. First, agencies should be required to use a checklist of good empirical practices and should promote decentralized evaluations of data and research. Second, absent compelling systematic evidence to the contrary, agencies should presume that consumers are best able to make their own energy-saving decisions, and should focus on regulations that address the harm that people impose on others. Third, a six-month early regulatory review process should be established for particularly important regulations to allow sufficient time for a thorough cost-benefit analysis and the incorporation of the results into the final regulations.

Investing in the Future: An Economic Strategy for State and Local Governments in a Period of Tight Budgets A Hamilton Project Strategy Paper February 2011 Michael Greenstone, Director, The Hamilton Project; Senior Fellow, The Brookings Institution;

Professor, Massachusetts Institute of Technology Adam Looney, Policy Director, The Hamilton Project; Senior Fellow, The Brookings Institution In this paper, The Hamilton Project highlights four policy principles for state and local governments with an emphasis on the importance of infrastructure investments for economic growth and prosperity. First, budgets should prioritize and protect key investments lest today’s budget woes translate into weak economic conditions and weak tax revenues tomorrow. Second, state and local governments must act to use their existing infrastructure resources more efficiently by investing in maintenance and using road pricing and user fees to address problems like congestion. Third, to maximize the value of new spending, projects should be subject to rigorous cost-benefit analysis and evaluation to guarantee that the projects with the greatest returns are the ones that are chosen. Fourth, good governance requires transparent and accessible budgeting.

Lowering Borrowing Costs for States and Municipalities Through CommonMuni A Hamilton Project Discussion Paper February 2011 Andrew Ang, Ann F. Kaplan Professor of Business, Columbia Business School Richard C. Green, Richard M. and Margaret S. Professor of Cyert Financial Economics, Carnegie Mellon University States and municipalities throughout the United States depend on the municipal bond market to raise funds for important investments in America’s schools, roads and highways, hospitals, utilities, and public buildings. Evidence suggests, however, that state and local governments that borrow money by issuing bonds and ordinary investors who buy those bonds may pay billions of dollars each year in unnecessary fees, transactions costs, and interest expense due to the lack of both transparency and liquidity in the municipal bond market. This paper proposes the establishment of CommonMuni, a not-for-profit, independent advisory firm that would reduce borrowing costs for municipalities and increase returns for investors by overcoming the difficulty individual municipalities and investors have in coordinating their actions and sharing market knowledge. CommonMuni would provide individualized advice, gather and disseminate information on bond issuers and transaction prices to increase transparency, and coordinate market participants to enhance liquidity in the municipal bond market. Importantly, CommonMuni could be started for roughly $25 million, just a tiny fraction of the potential benefits.

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Public-Private Partnerships to Revamp U.S. Infrastructure A Hamilton Project Discussion Paper February 2011 Eduardo Engel, Professor of Economics, Yale University Ronald Fischer, Professor, Center for Applied Economics at the Department of Industrial Engineering,

University of Chile in Santiago Alexander Galetovic, Professor of Economics, Universidad de los Andes in Santiago Public-private partnerships are often touted as a “best-of-both-worlds” alternative to public provision and privatization. But in practice, they have been dogged by contract design problems, waste, and unrealistic expectations. This paper proposes a series of best practices that communities can undertake to ensure that public-private partnerships provide public value. These include choosing partnerships for the right reasons; relying on flexible-term Present- Value-of-Revenue (PVR) contracts; including partnerships on government balance sheets; and implementing good governance practices. Enacting these reforms will help maximize taxpayer value and reduce risks for each party involved in a public-private partnership.

Fix It First, Expand It Second, Reward It Third: A New Strategy for America’s Highways A Hamilton Project Discussion Paper February 2011 Matthew E. Kahn, Professor of Economics, UCLA Institute of Environment and Sustainability, University of

California at Los Angeles David M. Levinson, Richard P. Braun/CTS Chair in Transportation, University of Minnesota The roads and bridges that make up our nation’s highway infrastructure are in disrepair as a result of insufficient maintenance—a maintenance deficit that increases travel times, damages vehicles, and can lead to accidents that cause injuries or even fatalities. This paper proposes a reorganization of our national highway infrastructure priorities to “Fix It First, Expand It Second, and Reward It Third.” First, all revenues from the existing federal gasoline tax would be devoted to repair, maintain, rehabilitate, reconstruct, and enhance existing roads and bridges on the National Highway System. Second, funding for states to build new and expand existing roads would come from a newly created Federal Highway Bank, which would require benefit-cost analysis to demonstrate the efficacy of a new build. Third, new and expanded transportation infrastructure that meets or exceeds projected benefits would receive an interest rate subsidy from a Highway Performance Fund to be financed by net revenues from the Federal Highway Bank.

2010 Creating 21st Century Jobs: Increasing Employment and Wages for American Workers in a Changing World A Hamilton Project & Center for American Progress Framing Paper December 2010 The U.S. labor market has not delivered for many Americans since the early 1970s. Over the whole period, the real wage of the median worker is largely unchanged, and the real earnings for non-college educated workers have declined. At the same time, the wages of the highly skilled have increased dramatically. In this paper, CAP and THP offer three discrete policy options that seek to promote the future competitiveness and prosperity of the U.S. labor force.

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A Modern Corporate Tax A Hamilton Project & Center for American Progress Discussion Paper December 2010 Alan Auerbach, Robert D. Burch Professor of Economics and Law, University of California Berkeley The U.S. corporate tax system introduced more than 100 years ago has not kept pace with changes to the economy. The growing role of financial innovation and the increasingly global nature of U.S. corporate operations are chief among these changes, necessitating reform. This paper proposes two reforms to the U.S. corporate tax system: first, an immediate deduction for all investments that would replace the current system of depreciation allowances, and second, replacing the current approach to taxing foreign-source income with a system that ignores all transactions except those occurring exclusively in the United States.

Supporting Work: A Proposal for Modernizing the U.S. Disability Insurance System A Hamilton Project & Center for American Progress Discussion Paper December 2010 David Autor, Professor of Economics, Massachusetts Institute of Technology Mark Duggan, Professor of Economics, University of Maryland A wealthy, compassionate nation should have a fair and efficient disability insurance program that protects workers and their families from poverty and loss of medical care in the event of work-limiting disability. However, SSDI is ineffective in assisting workers with disabilities to reach their employment potential or maintain economic self-sufficiency. Instead, the program provides strong incentives to applicants and beneficiaries to remain permanently out of the labor force, and it provides no incentive to employers to implement cost-effective accommodations that enable employees with work limitations to remain on the job. This proposal offers a blueprint for reversing this needless employment decline and stemming the dramatic growth of the SSDI program.

Grading Higher Education: Giving Consumers the Information They Need A Hamilton Project & Center for American Progress Discussion Paper December 2010 Bridget Terry Long, Professor of Education and Economics, Harvard Graduate School of Education Potential students and their families must navigate a labyrinth of incomplete and uncertain information when deciding where to go to college, what to study, or what career to pursue, resulting in an array of poor choices being made every day. This proposal calls for the federal government to expand the types of information that are available and allow users to compare indicators like cost, financial aid, student debt, employment outcomes, and average salaries following graduation, across peer institutions.

An Economic Strategy to Renew American Communities A Hamilton Project Strategy Paper October 2010 Michael Greenstone, Director, The Hamilton Project Adam Looney, Policy Director, The Hamilton Project When hit by recessions or other economic shocks, some communities have persistently low rates of economic growth that cause them to fall behind the rest of the country. In addition to negative economic effects, concentrated poverty may increase social problems like crime. To address this situation, we propose a three-pronged approach: attract businesses to distressed areas, invest in displaced workers, and match workers to jobs. A component of all these approaches is a commitment to rigorous evaluation of the policies themselves. A failure to evaluate these policies would be a missed opportunity to demonstrate policies that work, and would continue to disadvantage residents of communities that suffer distress.

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Bringing Jobs to People: How Federal Policy Can Target Job Creation for Economically Distressed Areas A Hamilton Project Discussion Paper October 2010 Timothy J. Bartik, Senior Economist, W. E. Upjohn Institute for Employment Research This paper proposes three solutions to bring jobs to distressed areas: customized job training programs for businesses and employees, advice and consulting services through the Manufacturing Extension Partnership program, and a package of grants for local services and tax breaks through a reformed and revitalized Empowerment Zone program. Built on evidence from regional economics research, these policies provide investments and incentives that increase employment and productivity in distressed areas. These programs, directed largely to small- and medium- sized enterprises, can have large effects on worker productivity and business competiveness, encouraging sustained employment and rising wages. Because these programs offer investments in workers, firms, and local services, they provide a higher return on government spending and are more cost effective than programs that focus on incentives alone.

The Mobility Bank: Increasing Residential Mobility to Boost Economic Mobility A Hamilton Project Discussion Paper October 2010 Jens Ludwig, McCormick Foundation Professor of Social Service Administration, Law, and Public Policy,

University of Chicago Steven Raphael, Professor of Public Policy, University of California, Berkeley The paper proposes the creation of a “mobility bank” at a government cost of less than $1 billion per year to help finance the residential moves of U.S. workers relocating either to take offered jobs or to search for work, and to help them learn more about the employment options available in other parts of the country. The government should target mobility bank loans toward displaced, unemployed, and underemployed people in depressed areas of the country and should help to insure people against job-outcome uncertainty by making repayment terms contingent on the borrower’s postmove employment and income. This proposal extends government support for work-related moves that already are included in the U.S. tax code but that primarily benefit higher income households.

Ten Economic Facts about Immigration Hamilton Project Economic Facts September 2010 Michael Greenstone, Director, The Hamilton Project Adam Looney, Policy Director, The Hamilton Project In this set of economic facts, we explore some of the questions frequently raised around immigration in the United States and provide facts drawn from publicly available data sets and the academic literature. These facts paint a more nuanced portrait of American immigration than is portrayed in today’s debate. Recent immigrants hail from many more countries than prior immigrants; they carry with them a wide range of skills from new PhDs graduating from American universities to laborers without a high school degree. Most recent immigrants have entered the United States legally, but around 11 million unauthorized immigrants currently live and work in America; the majority of these unauthorized workers settled here more than a decade ago. Each of these immigrant groups affects the U.S. economy in varied ways that should be considered in the current debate around immigration reform.

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The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and Earnings A Hamilton Project & Center for American Progress Discussion Paper May 2010 David Autor, Professor, MIT Department of Economics Between December 2007, when the U.S. housing and financial crises became the subject of daily news headlines, and March of 2010, the number of employed workers in the United States fell by 8.2 million, to 129.8 million from 138.0 million. In the same interval, the civilian unemployment rate nearly doubled, to 9.7 percent from 5.0 percent, while the employment-to-population ratio dropped to 58.6 percent from 62.7 percent—the lowest level seen in more than 25 years. Job losses of this magnitude cause enormous harm to workers, families, and communities. This paper analyzes the U.S. labor market over the past three decades and finds employment polarization on the rise as job opportunities decline in middle-skill occupations, resulting in a sharp increase in wage inequality.

2009 Strengthening One-Stop Career Centers: Helping More Unemployed Workers Find Jobs and Build Skills A Hamilton Project Discussion Paper April 2009 Louis S. Jacobson, Chief Economist, CNA This paper explores the role that One-Stop Career Centers play in helping the unemployed build new skills and find new jobs, and proposes introducing new performance measures that would make better use of existing resources and thereby expand One-Stop capacity to help more workers. Each year, One-Stops provide about 15 million workers with information about the characteristics of available jobs, strategies to land the best possible new jobs, and the benefits and costs of enrolling in training programs. Such services help workers rebound from cyclical and structural job loss in ways that foster long-term growth.

2008 A U.S. Innovation Strategy for Climate Change Mitigation A Hamilton Project Discussion Paper December 2008 Richard G. Newell, Professor, Duke University Within a market-based economy, success is maximized if policies directly address specific market problems. For technology innovation relevant to mitigating greenhouse gases (GHGs), the two principal market problems are a lack of private incentive to reduce GHGs by adopting low-GHG technologies, and underinvestment by industry in research and development (R&D), especially basic research. The strategy thus has two main parts to directly confront these two market problems, thereby increasing both the demand for and the supply of GHG-reducing innovations: (1) inducing innovation in industry through a stable, long-term price on GHGs, reinforced by permanent R&D tax credits, and (2) complementing this innovation through increased public support for targeted climate mitigation research in universities, other research institutions, and in the private sector.

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Improving the Measurement of Poverty A Hamilton Project Discussion Paper December 2008 Rebecca M. Blank, Senior Fellow, Brookings Institution Mark H. Greenberg, Professor, Georgetown University The authors recommend the adoption of a new poverty measure, along the lines recommended by the National Academy of Sciences (NAS), in order to provide a more accurate measure of economic need in the United States. The authors indicate why the NAS approach is superior to other possibilities and discuss the specific decisions that must be made to effectively implement a new poverty measure. They present data that indicate how such a change could affect poverty rates. They recommend a new NAS study to develop a measure for a “decent living standard” at a level above the poverty level, and recommend additional federal data collection and research.

From Prison to Work: A Proposal for a National Prisoner Reentry Program A Hamilton Project Discussion Paper December 2008 Bruce Western, Professor, Harvard University Around seven hundred thousand mostly low-income and minority men and women are released from prison each year. Returning to lives of low wages and high rates of unemployment, about two thirds will be rearrested within three years. I propose a national prisoner reentry program whose core element is up to a year of transitional employment available to all parolees in need of work. Transitional jobs are supplemented by substance-abuse treatment and housing after release, expanded work and educational programs in prison, and the restoration of eligibility for federal benefits for those with felony records. The program costs are offset by increased employment and reduced crime and correctional costs for program participants. By shifting supervision from custody in prison to intensive programs in the community, the national reentry program improves economic opportunity and reduces prison populations.

From Recession to Recovery to Renewal: An Economic Strategy to Achieve Broadly Shared Growth A Hamilton Project Strategy Paper September 2008 Roger C. Altman, Chairman, Evercore Partners Michael Greenstone, Director, The Hamilton Project Robert E. Rubin, Co-chair, Council on Foreign Relations & Former U.S. Treasury Secretary Sarah Cannon, Research Associate, The Hamilton Project A defining feature of United States history is that each generation of Americans has enjoyed a higher standard of living and access to opportunities not available to their parents. At the same time, the recession that began in 2007 has been one of the worst periods for American families since the Great Depression. Americans are living with the uniquely acute fears that are produced by economic insecurity. In this paper, The Hamilton Project argues that even in these difficult times it is vital that we begin to confront the challenges that pose a greater risk to our long-run prosperity than the Great Recession. Our perspective is that America’s future growth requires reprioritizing expenditures toward increasing workforce productivity, innovation and infrastructure, savings, and government effectiveness. However, the ability to make these investments is increasingly compromised by our difficult fiscal position. As part of this strategy to shift focus to long run prosperity, the United States should begin to confront the deficit as soon as the economic recovery has gained sufficient momentum.

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Path to Prosperity: An Economic Strategy to Achieve More Broadly Shared Growth A Hamilton Project Strategy Paper September 2008 Roger C. Altman, Chairman, Evercore Partners Jason E. Bordoff, Policy Director, The Hamilton Project Peter R. Orszag, Director, The Hamilton Project Robert E. Rubin, Director and Chairman, Executive Committee, Citigroup Inc. In an effort to advance innovative ideas about how to invest in our nation’s future prosperity and to enhance families’ economic security, The Hamilton Project has released strategy papers offering a broad vision for policy in a range of areas, as well as dozens of discussion papers on a wide variety of topics. These topics include education, health care, income security, science and technology, tax policy, climate change, energy security, infrastructure, workforce training, housing and financial markets, and poverty reduction, among others. These papers have all been written by leading scholars and grounded in real-world evidence about what works, not ideology and doctrine. This paper draws on this body of work to offer a vision for how to achieve opportunity, prosperity, and strong, broad-based economic growth.

An Opt-Out Home Mortgage System A Hamilton Project Discussion Paper September 2008 Michael S. Barr, Professor of Law, University of Michigan Law School Sendhil Mullainathan, Professor of Economics, Harvard University Eldar Shafir, Professor of Psychology and Public Affairs, Princeton University This paper develops a new framework for understanding the mortgage markets as the interaction between individuals with specific psychological biases and firms that respond to those psychologies within specific markets. We argue that regulation needs to take account of that interaction. Our new framework leads us to propose a sticky opt-out mortgage system, under which lenders would be required to offer borrowers loans with standard terms. Borrowers could opt out for other loans, but only after heightened disclosure requirements, and lenders would face increased exposure to liability or other sanctions.

Facilitating Shared Appreciation Mortgages to Prevent Housing Crashes and Affordability Crises A Hamilton Project Discussion Paper September 2008 Andrew Caplin, Professor of Economics, New York University Noël B. Cunningham, Professor of Law, New York University School of Law Mitchell L. Engler, Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University Frederick Pollock, Vice President, Morgan Stanley Infrastructure If current trends continue, today’s default crisis will soon be followed by an affordability crisis as an ever-increasing number of American households find themselves locked out of credit and unable to transition to homeownership. This reduction in homeownership will eventually create pressure to re-extend credit to marginal borrowers, in turn boosting house prices. As house prices rise, banks will likely relax lending standards even further. At some point, this credit extension will end as house prices stagnate or crash, just as they did in the current crisis. In short, the recent boom-bust cycle will repeat itself unless something is done to fundamentally change the structure of the mortgage market. This paper argues that development of shared appreciation mortgage (SAM) markets in the United States would moderate the impending decline in homeownership and lower the risk of future housing crashes.

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Getting More from Low-Income Housing Assistance A Hamilton Project Discussion Paper September 2008 Edgar O. Olsen, Professor of Economics, University of Virginia This paper argues that the two most serious structural shortcomings of the current system of low-income housing assistance are (1) its excessive reliance on unit-based assistance and (2) its failure to provide housing assistance to all of the poorest eligible families who ask for help. Evidence on the performance of housing programs indicates that unit-based assistance has a much greater cost than tenant-based assistance for provid-ing equally good housing, and it needlessly restricts recipient choice. The paper argues for a transition to an entitlement housing assistance program that relies exclusively on tenant-based assistance. It describes concrete actions that would achieve this result without spending additional money, and it shows that the major objections to these proposals are inconsistent with the evidence on program performance.

An Economic Strategy for Investing in America’s Infrastructure

A Hamilton Project Strategy Paper July 2008 Manasi Deshpande, Senior Research Assistant, The Hamilton Project Douglas W. Elmendorf, Director, The Hamilton Project In this paper the authors recommend establishing pricing mechanisms such as road congestion fees and air traffic control fees to make users bear the costs of their infrastructure use more fully for physical infrastructure. At least part of the revenues from these fees should be used to offset their potential adverse distributional effects. The federal government can also promote better decision making about new investments by removing distortions in its own policies and providing more flexibility in exchange for accountability by states and localities. For telecommunications infrastructure, we propose that the government make better use of the wireless spectrum by facilitating sales and leases of unused spectrum and by introducing more flexibility in its policy of interference prevention.

Pay-As-You-Drive Auto Insurance: A Simple Way to Reduce Driving-Related Harms and Increase Equity A Hamilton Project Discussion Paper July 2008 Jason E. Bordoff, Policy Director, The Hamilton Project Pascal J. Noel, Research Analyst, The Hamilton Project In this discussion paper, the authors propose and evaluate a simple alternative: pay-as-you-drive (PAYD) auto insurance. If all motorists paid for accident insurance per mile rather than in a lump sum, they would have an extra incentive to drive less. We estimate driving would decline by 8 percent nationwide, netting society the equivalent of about $50 billion to $60 billion a year by reducing driving-related harms. This driving reduction would reduce carbon dioxide emissions by 2 percent and oil consumption by about 4 percent. To put it in perspective, it would take a $1-per-gallon increase in the gasoline tax to achieve the same reduction in driving. Unlike an increase in the gas tax, PAYD would save most drivers money regardless of where they live. We estimate almost two-thirds of households would pay less for auto insurance, with each of those households saving an average of $270 per car.

The Untapped Promise of Wireless Spectrum A Hamilton Project Discussion Paper July 2008 Philip J. Weiser, Professor of Law and Telecommunications, University of Colorado

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This paper sets forth a new direction for spectrum policy reform. At the broadest level, it calls on policymakers to judge the Federal Communications Commission’s (FCC’s) success by whether it can spur the more efficient use of spectrum. To advance this objective, this paper highlights the importance of measuring how spectrum is being used, identifying blocks of unused spectrum, and encouraging greater leasing arrangements to gain access to otherwise unused or underused blocks of spectrum. This paper also calls for regulatory reform to catalyze more efficient uses of spectrum by providing greater flexibility to spectrum license holders than what is allowed under today’s antiquated regulatory regime.

America’s Traffic Congestion Problem: Toward a Framework for National Reform A Hamilton Project Discussion Paper July 2008 David Lewis, Senior Vice President, HDR Decision Economics, Inc. A large and growing burden on the nation’s economy, traffic congestion arises for various reasons, and more than one mechanism is needed to combat it. In this paper, the author argues that congestion pricing would reduce the economic costs from congestion and guide transportation resources to their best use, and would generate revenue for new investment and to compensate low-income people for whom toll payments are burdensome.

Air Support: Creating a Safer and More Reliable Air Traffic Control System A Hamilton Project Discussion Paper July 2008 Dorothy Robyn, Principal, The Brattle Group Our nation’s air traffic control system, run by the Department of Transportation’s Federal Aviation Administration (FAA), has not kept up with the explosive growth in air travel. This paper argues for two major changes designed to improve the safety and reliability of the air traffic control system. The first would create a new modal administration within the Department of Transportation focused exclusively on delivery of air traffic control services and regulated at arm’s length by the FAA. The second change would replace excise taxes on passengers, cargo and fuel with cost-based charges on (most) aircraft operators themselves. Prices would give users an incentive to consume air traffic control resources efficiently and establish a direct link between users and the FAA ("user pay, user say").

Bringing Broadband to Unserved Communities A Hamilton Project Discussion Paper July 2008 Jon M. Peha, Professor of Electrical Engineering and Public Policy, Carnegie Mellon University Roughly one-third of households in rural America cannot subscribe to broadband Internet services at any price. This puts many rural communities at a disadvantage with respect to economic growth, job creation, educational opportunities, health care information, commerce, and more. Internet users in urban areas are also adversely affected by the exclusion of so many rural households. This paper outlines policies through which government could facilitate the expansion of broadband infrastructure into unserved communities. He argues that these policy reforms would move America closer to the goal of universal access to broadband Internet.

Missing Markets: Why Markets that Can Reduce Risks are Missing and What Can be Done About It A Hamilton Project Overview June 2008 Jason Furman, Director, The Hamilton Project

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Markets are the central institution of the economy, allowing people to buy and sell goods and services in a manner that potentially makes everyone better off. Markets can also play a role in reducing the risks that individuals face by allowing them to purchase insurance such as health insurance, life insurance, or property insurance. But in certain situations, markets that could potentially help to mitigate or reduce the risks faced by society and individuals are underutilized or even nonexistent, leaving households to face some of the largest risks without any protection. The absence of markets to address societal risks can exacerbate these problems as well. These papers identify a range of missing markets for both societal and individual risk, highlighting three specific reasons for the absence of these markets and proposing solutions to enable private markets to flourish or public markets to play a role.

Stabilizing State and Local Budgets: A Proposal for Tax-Base Insurance A Hamilton Project Discussion Paper June 2008 Akash Deep, Senior Lecturer of Public Policy, Harvard University Robert Z. Lawrence, Albert L. Williams Professor of International Trade, Harvard University Local governments that are constrained to balance their budgets have been forced to deal with short-term revenue shocks by cutting spending or increasing taxes. These actions exacerbate rather than alleviate the effects of the shocks, posing a risk of long-term problems. This study proposes an affordable federal instrument that could mitigate the adverse impact of tax-revenue shocks on communities by allowing them to buy tax-base insurance. With annual premiums of less than 1 percent of their tax revenues, local communities could use insurance to mitigate revenue shocks by taking advantage of risk-sharing opportunities.

Increasing Annuitization of 401(k) Plans with Automatic Trial Income A Hamilton Project Discussion Paper June 2008 William G. Gale, Vice President and Director of Economic Studies, The Brookings Institution J. Mark Iwry, Nonresident Senior Fellow, The Brookings Institution David John, Senior Fellow, The Heritage Foundation Lina Walker, Research Director, Retirement Security Project This paper proposes a policy that would increase the role of lifetime income products in future retirees’ overall retirement planning. Over the next few decades, a substantial number of workers will retire with larger balances in their retirement accounts and have fewer sources of longevity protection than retirees today. They, therefore, must manage these resources to ensure they last throughout their retirement. Specifically, the authors propose that a substantial portion of assets in 401(k) and other similar plans be automatically directed (defaulted) into a two-year trial income product when retirees take distributions from their plan, unless they affirmatively choose not to participate.

Financing Losses from Catastrophic Risks A Hamilton Project Discussion Paper June 2008 Kent Smetters, Associate Professor, Wharton School at the University of Pennsylvania David Torregrosa, Analyst, Congressional Budget Office Catastrophe insurance helps spread risks and increases the ability of policyholders and the economy to recover from both natural disasters and terrorist attacks. Government policies, however, may unintentionally limit the role of the private sector in insuring against catastrophic losses. This paper discusses several policy options to finance losses from catastrophic risk.

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If, When, How: A Primer on Fiscal Stimulus A Hamilton Project Strategy Paper January 2008 Douglas W. Elmendorf, Senior Fellow, The Brookings Institution Jason Furman, Director, The Hamilton Project Recent economic data provide the clearest signs that the problems in the housing and financial markets are affecting the economy as a whole. In December 2007 payroll employment growth fell nearly to zero and the unemployment rate rose 0.3 percentage points to 5.0 percent. The last time the unemployment rate climbed this much in one month was in the 2001 recession. Delinquency and foreclosure rates are rising and risk spreads in financial markets remain much wider than last summer. On the other hand, there are some reassuring indicators: net exports have been trending up, and consumer spending rose at a brisk pace in October and November. However, most forecasters are predicting a marked slowdown in economic growth for several quarters, and many put the odds of recession in the neighborhood of 50 percent.

2007 A Hand Up: A Strategy to Reward Work, Expand Opportunity, and Reduce Poverty A Hamilton Project Strategy Paper December 2007 Jason E. Bordoff, Policy Director, The Hamilton Project Jason Furman, Director, The Hamilton Project Paige Shevlin, Production Editor, The Hamilton Project Poverty remains a pressing problem in the United States. Many of the 36 million Americans in poverty are working, but full-time work at the minimum wage does not provide enough income to escape poverty. This paper offers a three-part strategy to reduce poverty and strengthen growth across the income spectrum. This paper’s principal focus is on programs to reward and facilitate work. Second, a broader set of policies is necessary to prepare people to succeed, by investing in human capital and other critical needs. Finally, public policies should provide a more robust safety net and a set of social insurance policies to help people rebound if they do experience economic hardship, and reduce the likelihood of their falling below a certain economic level at any point.

Better Workers for Better Jobs: Improving Worker Advancement in the Low-Wage Labor Market A Hamilton Project Discussion Paper December 2007 Harry J. Holzer, Professor of Public Policy, Georgetown University

This paper proposes a new federal funding stream to identify, expand, and replicate the most successful state and local initiatives designed to spur the advancement of low-wage workers in the United States. In the Worker Advancement Grants for Employment in States (WAGES) program, the federal government would offer up to $5 billion annually in matching funds for increases in state, local, and private expenditures on worker advancement initiatives. To gain funding, states would have to develop local advancement “systems,” which would provide career-oriented education and training to youth, working poor adults and “hard-to-employ” workers.

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New Hope: Fulfilling America’s Promise to “Make Work Pay” A Hamilton Project Discussion Paper December 2007 Hans Bos, President and CEO, Berkeley Policy Associates Greg J. Duncan, Edwina S. Tarry Professor, Northwestern University Lisa A. Gennetian, Research Director, Brookings Institution Heather D. Hill, Visiting Scholar, Brown University Despite the political rhetoric of "making work pay," in 2005 some 3.7 million households included a full-time worker and yet lived in poverty. This paper makes the case for a national program offering the kind of work supports that were part of the New Hope program, a policy experiment that operated for three years in Milwaukee, Wisconsin in the mid- to late-1990s. New Hope was created by a coalition of community activists and business leaders. It provided a set of work supports for full-time workers—parents and nonparents, men and women—that would lift them out of poverty, ensure that they had access to quality child care and health insurance and, if needed, provide a temporary community service job to help get them on their feet.

Employment-Based Tax Credits for Low-Skilled Workers A Hamilton Project Discussion Paper December 2007 John Karl Scholz, Professor of Economics, University of Wisconsin-Madison Families in low-income communities face three interrelated problems: unemployment rates are high, incarceration rates of low-skilled men are high, and a large fraction of children in low-income communities are being raised in single-parent households. To address these interrelated problems, the author proposes a two-part policy designed to increase the return to work. The first part of the proposal is an expanded earned income tax credit that would apply to low-income, childless taxpayers. The second part of the proposal is a targeted wage subsidy for low-wage workers who live in certain economically depressed areas, whereby the federal government would pay subsidies of 50 percent of the difference between the worker’s market wage and a target wage of $11.30 per hour.

An Economic Strategy to Address Climate Change and Promote Energy Security A Hamilton Project Strategy Paper October 2007 Jason Furman, Director, The Hamilton Project Jason Bordoff, Policy Director, The Hamilton Project Manasi Deshpande, Research Assistant, The Hamilton Project Pascal Noel, Senior Research Assistant, The Hamilton Project The related issues of climate change and energy security are now generally accepted as major challenges. U.S. greenhouse gas emissions contribute to climate change while its reliance on oil reduces its economic and national security. To tackle both problems, the United States must substantially reduce its consumption of fossil fuels. This paper presents a three-part strategy for addressing climate change and promoting energy security. First, the government should price carbon and oil correctly so that the private sector has an incentive to reduce their use. Second, the government should increase and refocus public investments on basic research and on long-run speculative energy technologies. Finally, the United States should lead by example and engage major emitting nations in an international response to climate change.

An Equitable Tax Reform to Address Global Climate Change A Hamilton Project Discussion Paper October 2007 Gilbert E. Metcalf, Professor, Tufts University

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This paper describes a carbon tax swap that is both revenue and distributionally neutral. The tax swap would levy a tax on greenhouse gas emissions. The revenue would be used to fund a reduction in the income tax, tied to earned income. Specifically, the proposal calls for a tax on greenhouse gas emissions at an initial rate of $15 per ton of carbon dioxide equivalent and gradually increasing over time. A refundable tax credit would be offered for sequestered greenhouse gases and other approved sequestration activities. In addition, to offset the new carbon tax, the proposal would implement an environmental tax credit in the personal income tax equal to the employer and employee payroll taxes on initial earnings up to a limit.

A U.S. Cap-and-Trade System to Address Global Climate Change A Hamilton Project Discussion Paper October 2007 Robert N. Stavins, Professor, Harvard University The need for a domestic U.S. policy that seriously addresses climate change is increasingly apparent. A cap-and-trade system is the best approach in the short to medium term. Besides providing certainty about emissions levels, cap-and-trade offers an easy means of compensating for the inevitably unequal burdens imposed by climate policy; it is straightforward to harmonize with other countries’ climate policies; it avoids the current political aversion in the United States to taxes; and it has a history of successful adoption in this country. The paper proposes a specific cap-and-trade system with several key features including: an upstream cap on CO2 emissions with gradual inclusion of other greenhouse gases; a gradual downward trajectory of emissions ceilings over time to minimize disruption and allow firms and households time to adapt; and mechanisms to reduce cost uncertainty.

Universal, Effective and Affordable Health Insurance: An Economic Imperative A Hamilton Project Overview July 2007 Jason Furman, Senior Fellow, Brookings Institution, Director of The Hamilton Project Robert E. Rubin, Director and Chairman of the Executive Committee, Citigroup Inc. The typical insured family pays, directly and indirectly, more than one-sixth of its income for health care. And this expensive care is far less effective than it should be: Americans get too little preventive care when well, and only 55 percent of proven effective therapies are administered when they are sick. At the same time, one-third or more of many major medical procedures are either inappropriate or of debatable value. This paper examines the interrelated problems of uninsurance and expensive or ineffective care in the American healthcare system. Universal insurance would eliminate uncompensated cost shifts and expand risk pooling and reduce the fragmentation of financing.

Achieving Universal Coverage Through Medicare Part E(veryone) A Hamilton Project Discussion Paper July 2007 Gerard F. Anderson, Professor, Johns Hopkins University Hugh R. Waters, Associate Professor, Johns Hopkins University This proposal adopts Medicare rules and payment systems to provide the same benefits to the enrollees in Medicare Part E(veryone) as current Medicare beneficiaries receive today. Private health plans could participate through Medicare Parts C and D, offer Medigap coverage, and continue to offer private health insurance coverage. Firms could buy into the Medicare Part E program for all of their employees, and they would contribute at least as much to the premium as their employees do. Those without employer-based coverage could enroll individually.

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Taking Massachusetts National: An Incremental Approach to Universal Health Insurance A Hamilton Project Discussion Paper July 2007 Jonathan Gruber, Professor, Massachusetts Institute of Technology In this paper, the author reviews what we know about the uninsured and why we should care about covering them. He then discusses the issues that must be addressed to achieve universal coverage, and discuss the Massachusetts reform which tried to navigate between the right and the left on this important issue.

A Comprehensive Cure: Universal Health Care Vouchers A Hamilton Project Discussion Paper July 2007 Ezekiel J. Emanuel, Chair, Dept. of Bioethics, National Institutes of Health Victor R. Fuchs, Professor Emeritus, Stanford University

This paper discusses a Universal Healthcare Voucher System, which would achieve universal health coverage by entitling all Americans to a standard package of benefits comparable to that received by federal employees. The Universal Healthcare Voucher System (UHV) achieves universal health coverage by entitling all Americans to a standard package of benefits comparable to that received by federal employees. Enrollment and renewal are guaranteed regardless of health status, as is the individual's right to buy additional services beyond the standard benefits with after tax dollars. Health plans would receive a risk-adjusted payment based on their enrollment. UHV is funded entirely by a dedicated value-added tax (VAT) with the rate set by Congress.

Achieving Progressive Tax Reform in an Increasingly Global Economy A Hamilton Project Strategy Paper June 2007 Jason Furman, Senior Fellow and Director, The Hamilton Project Lawrence H. Summers, Charles W. Eliot University Professor, Harvard University Jason Bordoff, Policy Director, The Hamilton Project This strategy paper offers six broad principles that reflect the challenges facing our tax system in the twenty-first century. The authors believe these principles should command wide assent as policymakers consider tax reforms, whether incremental or far-reaching: Fiscal responsibility requires addressing both taxes and spending. 1) Rising inequality strengthens the case for progressivity; 2) The tax system should collect the taxes that are owed; 3) Tax reform should strengthen taxation at the business level; 4) Taxes for individuals should be simplified; and 5) Social policy can and should often be advanced through the tax code—and it must be well designed.

Reforming Corporate Taxation in a Global Economy: A Proposal to Adopt Formulary Apportionment A Hamilton Project Discussion Paper June 2007 Kimberly A. Clausing, Professor of Economics, Reed College Reuven S. Avi-Yonah, Irwin I. Cohn Professor of Law, University of Michigan Law School

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The current system of taxing multinational firms relies on separate accounting: firms account for earnings and costs in each location in which they operate. This system generates a large tax incentive to earn income in low-tax countries, and multinational firms respond by earning disproportionate profits in low-tax locations. This paper proposes a system of formulary apportionment for taxing the corporate income of multinational firms. Under our proposal, the U.S. tax base for multinational corporations would be calculated based on a fraction of their worldwide income. This fraction would simply be the share of their worldwide sales that are destined for customers in the United States.

Taxing Privilege More Effectively: Replacing the Estate Tax with an Inheritance Tax A Hamilton Project Discussion Paper June 2007 Lily L. Batchelder, Associate Professor, New York University School of Law The repeal of the estate tax for one year only in 2010 creates vast uncertainty but also provides an opportunity to reconsider the taxation of gifts and bequests. This paper proposes replacing the estate tax with an inheritance tax. Heirs receiving lifetime inheritances greater than $2.3 million would include in income and pay a 15 percentage point surtax on the excess. The proposal would also replace stepped-up basis with carryover basis for bequests. As under the estate tax, the fraction of heirs affected would be miniscule, falling from three to two in 1,000.

Rehabilitating the Business Income Tax A Hamilton Project Discussion Paper June 2007 Edward D. Kleinbard, Partner, Cleary Gottlieb Steen & Hamilton LLP This paper introduces the Business Enterprise Income Tax (BEIT), a comprehensive and detailed proposal for reforming business income taxation. Current law fails to tax all business income consistently and comprehensively. It distorts economic behavior and diverts managerial effort toward tax avoidance.

Evolving Beyond Traditional Employer-Sponsored Health Insurance A Hamilton Project Discussion Paper May 2007 Stuart M. Butler, Vice President, Domestic and Economic Policy Studies, The Heritage Foundation

For most working-age families, health insurance coverage is directly connected to the workplace. But because of structural weaknesses in this traditional form of coverage, it is steadily eroding, especially for workers in the small business sector. This paper propose three areas of reform: 1) create state-chartered insurance exchanges to offer portable health plans, 2) transform employers into facilitators of health care coverage, rather than sponsors, and 3) reform the tax treatment of health care to give state exchanges the same tax exemptions enjoyed by the current employer-based system.

The Promise of Progressive Cost Consciousness in Health-care Reform A Hamilton Project Discussion Paper April 2007 Jason Furman, Senior Fellow at the Brookings Institution and Director of The Hamilton Project Americans are frustrated with the unaffordability of health insurance, the effectiveness of health care, and the rising number of uninsured. This paper proposes a template for a progressive cost sharing plan that would require typical families to pay half of their health costs until they reached 7.5 percent of their income; low-income families would not have any cost sharing. The analysis shows that this template could reduce total health spending by 13 to 30 percent, reducing premiums by 22 to 34 percent without hurting health outcomes.

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A Wellness Trust to Prioritize Disease Prevention A Hamilton Project Discussion Paper April 2007 Jeanne M. Lambrew, Associate Professor, The George Washington University, Senior Fellow, Center for

American Progress A new set of health challenges confronts the United States at the beginning of the twenty-first century. Instead, a new system for health promotion and disease prevention in the United States is needed, and one such model is proposed in this paper. It would carve preventive services out of the existing health insurance system and would finance those services through the Wellness Trust, a new agency under the Department of Health and Human Services. This Trust would set national priorities for prevention, employ innovative and effective systems for delivering them, and align payments with priorities. The Trust would be the primary provider of prevention priorities for all Americans, irrespective of insurance status, and would reconnect with the medical system through an electronic health record. While this proposal may not have immediate or, in some cases, overall budget savings, it has the potential to improve and extend lives.

Mending the Medicare Prescription Drug Benefit: Improving Consumer Choices and Restructuring Purchasing A Hamilton Project Discussion Paper April 2007 Richard G. Frank, Professor of Health Economics, Department of Health Care Policy, Harvard Medical School

and John F. Kennedy School of Government Joseph P. Newhouse, Professor of Health Policy and Management, Harvard School of Public Health, Harvard

Medical School and John F. Kennedy School of Government The Part D prescription drug benefit has brought affordable drug coverage to millions of elderly Americans and is a valuable addition to Medicare. This paper proposes a series of reforms to address the challenges facing Medicare’s Part D prescription drug benefit. These reforms include creating a standardized set of plans, increasing competition, and lowering prices paid for drugs.

An Education Strategy to Promote Opportunity, Prosperity, and Growth A Hamilton Project Strategy Paper February 2007 Joshua Bendor, Research Assistant, The Hamilton Project Jason E. Bordoff, Policy Director, The Hamilton Project Jason Furman, Director, The Hamilton Project Investments in education yield large returns to both society and the individual. To better secure the benefits of education, The Hamilton Project outlines an evidence-based education strategy that emphasizes new investments in some areas (such as early education) and structural reforms in others (such as the teacher tenure system).

College Grants on a Postcard: A Proposal for Simple and Predictable Federal Student Aid A Hamilton Project Discussion Paper February 2007 Susan M. Dynarski, Associate Professor, Kennedy School of Government, Harvard University Judith Scott-Clayton, Doctoral candidate, Kennedy School of Government, Harvard University

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The federal student aid system is ineffective at increasing college enrollment because it is too complex and delivers information to students too late. This paper uses detailed statistical analysis to show that the level of complexity is not necessary to target aid to those who need it most. It then proposes a dramatically simplified system that could significantly increase college enrollment.

Success By Ten: Intervening Early, Often, and Effectively in the Education of Young Children A Hamilton Project Discussion Paper February 2007 Jens Ludwig, Nonresident Senior Fellow, Economic Studies, Brookings Institution Isabel Sawhill, Cabot Family Chair and Senior Fellow, Economic Studies, Brookings Institution The absence of a quality early education for many disadvantaged children represents an extraordinary waste of human potential. This proposal would help such children achieve success in school by age ten, while also providing economy-wide benefits, through an intensive early education program that starts shortly after birth and continues through grade four.

Reshaping Student Loan Programs to Fit the Careers of Young College Graduates A Hamilton Project Discussion Paper February 2007 Thomas J. Kane, Professor, Harvard Graduate School of Education The payoff to a college education has increased dramatically over the last two decades. At the same time, the cost of a college education has increased steeply. To provide all Americans with the opportunity to share in the prosperity of the knowledge-based economy, those high-school graduates who are prepared to benefit from college must have access to the financial resources needed to pursue their education. This paper proposes improvements to the federal grant programs, but the student loan programs will also be crucial for ensuring college access. The objective of federal financial aid policy should be to get the necessary funding into the hands of students and their families to pay their college bills—but with the right amount of subsidy to balance the goals of ensuring access and preserving families’ incentive to spend those resources wisely.

2006

Promoting Opportunity and Growth through Science, Technology, and Innovation A Hamilton Project Strategy Paper December 2006 Jason E. Bordoff, Policy Director, The Hamilton Project Michael Deich, Managing Director, The Hamilton Project Rebecca Kahane, Research Assistant, The Hamilton Project Peter R. Orszag, Director, The Hamilton Project Americans are facing heightened economic pressures from the effects of globalization as workers from China, India, and other developing nations play a growing role in the world's economy. Advances in technology and transportation now mean that U.S. workers increasingly are competing with workers overseas—not just in manufacturing, but also in high-skill and high-wage sectors. Growth in information technologies, in particular, has facilitated deeper integration of economies across the globe while also posing both new opportunities and new challenges for the U.S. economy. This strategy paper argues that maintaining our nation's economic leadership in the world and promoting broad-based growth at home will require effective policies to support research, innovation, and access to advanced information and telecommunications technologies.

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Investing in the Best and Brightest: Increased Fellowship Support for American Scientists and Engineers A Hamilton Project Discussion Paper December 2006 Richard B. Freeman, Ascherman Professor of Economics, Harvard University There is widespread concern that the United States faces a problem in maintaining its position as the scientific and technological leader in the world and that loss of leadership threatens future economic well-being and national security. Richard Freeman discusses the National Science Foundation fellowship policy. He argues that current U.S. NSF fellowship policy gives less of an incentive for students to enter science and engineering than in earlier periods.

Prizes for Technological Innovation A Hamilton Project Discussion Paper December 2006 Thomas Kalil, Special Assistant to the Chancellor for Science and Technology, University of California, Berkeley; Senior

Fellow, Center for American Progress

Science, technology, and innovation are essential to America's continued economic growth, and can help achieve a wide range of national and global policy objectives. One currently underutilized tool for stimulating technological innovation is inducement prizes, which encourage efforts by contestants to accomplish a particular goal. Thomas Kalil proposes expanding the US government’s use of prizes and Advanced Market Commitments to stimulate technological innovation in space exploration, African agriculture, vaccines for diseases of the poor, energy and climate change, and learning technologies.

Aligning Patent Presumptions with the Reality of Patent Review: A Proposal for Patent Reform A Hamilton Project Discussion Paper December 2006 Doug Lichtman, Professor of Law, The University of Chicago The United States Patent and Trademark Office is tasked with the job of reading patent applications and determining which ones qualify for patent protection. It is a Herculean task. One problem is resources. The Patent Office expects more than four hundred thousand new patent applications to be filed in 2007. To accurately evaluate the merits of all of those purported inventions would cost billions. Add to that the administrative costs of both interacting with all of the relevant lawyers and documenting the entire process, and the required budget is quickly beyond reach. In this paper, Doug Lichtman discusses the limitations of the current pension review system and proposes policy reforms that would correct for these issues.

A Growth-Enhancing Approach to Economic Security A Hamilton Project Strategy Paper September 2006 Jason E. Bordoff, Policy Director, The Hamilton Project Michael Deich, Managing Director, The Hamilton Project Peter R. Orszag, Director, The Hamilton Project

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Overall macroeconomic growth is not translating into significantly improved economic well-being for most families. In addition to the well-documented stagnation in median wages during the past three decades, American families now face substantial new economic risks: The chance of family income dropping considerably from one year to the next has risen significantly. Workers are individually bearing more of the risk associated with health insurance and pensions. At the same time, the safety nets for those who are hit by economic shocks have frayed. This paper outlines a strategy for providing a basic level of economic security that is beneficial for families and for national economic growth.

Universal Insurance: Enhancing Economic Security to Promote Opportunity A Hamilton Project Discussion Paper September 2006 Jacob S. Hacker, Professor of Political Science, Yale University The economic risks faced by American families have increased dramatically over the past three decades. For example, while the share of families experiencing a drop in real income over any two-year period has remained steady at about half, the median income drop for such families has risen from approximately 25 percent of income in the early 1970s to around 40 percent by the late 1990s and early 2000s. This paper puts forward one potential approach, focused on providing temporary and partial relief from severe economic shocks. This proposed program, Universal Insurance, would be available to the majority of American families and would build on, rather than supplant, existing social insurance programs.

Fundamental Restructuring of Unemployment Insurance: Wage-Loss Insurance and Temporary Earnings Replacement Accounts A Hamilton Project Discussion Paper September 2006 Jeffrey R. Kling, Senior Fellow and Deputy Director, Economic Studies This paper describes a revenue-neutral proposal to fundamentally restructure the system of social insurance after job loss in order to improve the protection against long-term effects of involuntary unemployment, provide a more progressive allocation of benefits, reduce incentives for firms to lay off workers, and encourage reemployment.

Reforming Unemployment Insurance for the Twenty-First Century Workforce

A Hamilton Project Discussion Paper September 2006 Lori G. Kletzer, Professor of Economics, University of California, Santa Cruz, and Senior Fellow,

Institute for International Economics Howard Rosen, Executive Director, Trade Adjustment Assistance Coalition, and Visiting Fellow,

Institute for International Economics In this paper we propose three broad reforms, each designed to help the Unemployment Insurance system better meet the needs of a twenty-first century workforce. First, we propose strengthening the federal role in UI by setting federal standards that would require states to harmonize their eligibility criteria and benefit levels. These new standards would aim to raise average national benefit levels and average national recipiency rates. Second, we propose a wage loss insurance program, as part of the UI program, to provide an earnings supplement for those workers who become reemployed at a wage lower than the wage they earned at their previous job. Finally, we propose allowing self-employed workers, and perhaps others, to contribute up to 0.25 percent of annual income, up to $200 per year, into Personal Unemployment Accounts (PUAs). These contributions would be matched by the federal government and could be withdrawn later to cushion severe income losses or to finance training or job search.

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Growth, Opportunity, and Prosperity in a Globalizing Economy A Hamilton Project Strategy Paper July 2006 Peter R. Orszag, Director, The Hamilton Project Michael Deich, Managing Director, The Hamilton Project This briefing paper articulates a philosophy of embracing international competition while investing in workers and market-friendly insurance. The underlying goal of this philosophy is to boost overall productivity while also sharing more broadly both the benefits and costs of trade. Not surprisingly, given the similarities between trade and other forces contributing to creative destruction, this approach to trade is consistent with The Hamilton Project's overall economic strategy of embracing the dynamism of a modern economy supported by effective government programs that spread the benefits of growth more broadly.

The Simple Return: Reducing America’s Tax Burden Through Return-Free Filing A Hamilton Project Discussion Paper July 2006 Austan Goolsbee, Professor of Economics, University of Chicago, Graduate School of Business This paper proposes a program known as the "Simple Return," which would make it much easier for the millions of taxpayers with a relatively simple tax status to file their taxes. The Simple Return might apply to as many as 40 percent of Americans, for whom it could save up to 225 million hours of time and more than $2 billion a year in tax preparation fees. Converting the time savings into a monetary value by multiplying the hours saved by the wage rates of typical taxpayers, the Simple Return system would be the equivalent of reducing the tax burden for this group by about $44 billion over ten years. A Government Accountability Office report estimated in 1996 that a plan similar to the one proposed here could save the IRS close to $36 million per year by reducing the number of errors in tax filings and the subsequent need for investigations.

An Economic Strategy to Advance Opportunity, Prosperity, and Growth A Hamilton Project Strategy Paper April 2006 Roger C. Altman, Chairman, Evercore Partners Jason E. Bordoff, Policy Director, The Hamilton Project Peter R. Orszag, Director, The Hamilton Project Robert E. Rubin, Director and Chairman, Executive Committee, Citigroup Inc.

Americans’ long-held belief that education and hard work advances each generation’ outlook has provided a powerful incentive for industrious activity, spurring the unprecedented economic growth that the United States has enjoyed for more than two centuries. Yet the fundamental principle that all citizens should have an opportunity to succeed is at risk today because the nation is neither paying its way nor investing adequately in its future. The Hamilton Project at Brookings advances innovative policy ideas for improving our nation’s economic policy.

Identifying Effective Teachers Using Performance on the Job A Hamilton Project Discussion Paper April 2006 Robert Gordon, Senior Vice President for Economic Policy, Center for American Progress Thomas J. Kane, Professor, Harvard Graduate School of Education Douglas O. Staiger, Professor of Economics, Dartmouth College

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Traditionally, policymakers have attempted to improve the quality of the teaching force by raising minimum credentials for entering teachers. Recent research, however, suggests that such paper qualifications have little predictive power in identifying effective teachers. We propose federal support to help states measure the effectiveness of individual teachers—based on their impact on student achievement, subjective evaluations by principals and peers, and parental evaluations. States would be given considerable discretion to develop their own measures, as long as student achievement impacts (using so-called "value-added" measures) are a key component.

Summer Opportunity Scholarships (SOS): A Proposal to Narrow the Skills Gap A Hamilton Project Discussion Paper April 2006

Molly E. Fifer, Graduate Researcher, Princeton University

Alan B. Krueger, Bendheim Professor of Economics and Public Policy, Princeton University

Even in early grades, a large gap in skills exists between students from economically advantaged and disadvantaged families. Evidence suggests that a substantial share of this skills gap emerges during the summer months, when school is not in session. We propose and design a policy of Summer Opportunity Scholarships (SOS), which will provide scholarships so that economically disadvantaged children in kindergarten through fifth grade can participate in a six-week summer school or summer enrichment program of their parents' choosing. SOS summer program providers will be required to use small-group, scientifically based instruction with a strong emphasis on improving basic reading and math skills, which are a particular area of concern for many disadvantaged children. Students and providers participating in SOS will be evaluated annually to assess the program's effectiveness.

Improving Opportunities and Incentives for Saving by Middle- and Low-Income Households A Hamilton Project Discussion Paper April 2006 William G. Gale, Senior Fellow, Economic Studies Jonathan Gruber, Professor of Economics, Massachusetts Institute of Technology Peter R. Orszag, Director, The Hamilton Project Many middle- and low-income Americans retire without having accumulated sufficient savings to enjoy a comfortable retirement. Low retirement saving is not primarily due to a lack of eligibility for tax-favored retirement accounts, but rather to a lack of take-up. Furthermore, the financial incentive to enroll in an IRA or 401(k) plan is often weak or nonexistent because the value of contributing money, and thus excluding it from taxation, depends on a taxpayer's tax bracket—and the majority of households face a 15 percent or lower marginal tax rate. We offer proposals to address impediments to saving. First, we would require every firm (with possible exceptions for the smallest businesses) to enroll its new workers automatically in at least one plan: a traditional defined benefit plan, a 401(k), or an IRA. Second, our proposal would replace current tax deductions for contributions to tax-preferred retirement accounts with a new program providing universal matching contributions from the government for household deposits to 401(k)s and IRAs.