Path to Prosperity

Path to Prosperity: Hamilton Project Ideas on Income Security, Education, and Taxes

JASON FURMAN
JASON E. BORDOFF
Foreword by Robert E. Rubin
Copyright Date: 2008
Pages: 415
https://www.jstor.org/stable/10.7864/j.ctt1262d6
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  • Book Info
    Path to Prosperity
    Book Description:

    Since its launch in 2006, the Hamilton Project at Brookings has produced extensive research on how to create a growing economy that benefits all Americans. Its pragmatic work aims to increase opportunities for broad-based wealth, economic security, and enduring growth. Path to Prosperity, the first book to emerge from the Hamilton Project, presents important and original work to that end. Path to Prosperityfocuses on three key criteria for fostering broadly shared economic growth: enhancing economic security, building a highly skilled work force, and reforming the tax system. Income security proposals offer methods for reforming unemployment insurance, protecting against the risk of reemployment at a lower wage after job loss, and improving incentives for retirement saving. Education proposals build human capital by improving each level of education, from preschool programs for poor children to graduate fellowships in math and science. The tax proposals seek to make taxation simpler, more progressive, and better suited to a global economy. Contributors include Roger C.Altman, Reuven S.Avi-Yonah, Jason E. Bordoff, Kimberly A. Clausing, Susan M. Dynarski, Molly E. Fifer, Richard B. Freeman, Jason Furman,William G. Gale,Austan Goolsbee, Robert Gordon, Jonathan Gruber,Thomas J. Kane, Lori Kletzer, Jeffrey R. Kling, Alan B. Krueger, Jens Ludwig, Peter R. Orszag, Howard F. Rosen, Robert Rubin, Isabel Sawhill, Judith E. Scott-Clayton, and Douglas O. Staiger.

    eISBN: 978-0-8157-0154-5
    Subjects: Economics, Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Foreword
    (pp. vii-xii)
    Robert E. Rubin

    The United States of America is at a critical juncture—both because of our unmet long-term challenges and because of the transformational changes taking place in the global economy. From Silicon Valley to the Rust Belt and from Main Street to Wall Street, what we took for granted in the twentieth century is now subject to upheaval in the twenty-first century. Decades of the unrivaled economic dominance of our country have given way to a much more complicated and competitive world.

    The challenges we face are increasingly complex and highly consequential, and we are far from where we need to...

  4. 1 Path to Prosperity
    (pp. 1-26)
    ROGER C. ALTMAN, JASON E. BORDOFF, JASON FURMAN and ROBERT E. RUBIN

    The Hamilton Project has for the past two and a half years put forth an overarching economic strategy, and policy options consistent with that strategy, for promoting strong economic growth, broad-based participation in that growth, and increased economic security. The project’s proposals span a wide range of policy areas related to achieving strong economic growth and helping the gains of that prosperity to be more broadly shared—education, health care, income security, science and technology, tax policy, climate change, energy security, workforce training, and poverty reduction, among others. The proposals advanced have come from leading academics, practitioners, and policy analysts...

  5. PART I Enhancing Economic Security
    • 2 Fundamental Restructuring of Unemployment Insurance: Wage-Loss Insurance and Temporary Earnings Replacement Accounts
      (pp. 29-62)
      JEFFREY R. KLING

      The churning U.S. labor market both creates and destroys jobs as part of a vibrant process through which the economy responds to inventions, changes in production technology, global and domestic competition, and shifts of consumer demand. Employers created 57 million jobs during 2005, and 54 million jobs ended. Of the jobs that ended, 37 percent—20 million—were involuntary job losses initiated by the employer.¹ On an average day in 2005, 3.7 million people who had involuntarily lost their jobs were actively seeking work, including 2 million who were permanently displaced due to plant closings or adverse business conditions.²

      Permanent...

    • 3 Reforming Unemployment Insurance for the Twenty-First-Century Workforce
      (pp. 63-92)
      LORI G. KLETZER and HOWARD ROSEN

      The unemployment insurance (UI) system is the foundation of the U.S. government’s response to the hardships associated with economic downturns and related job loss. In response to the Great Depression, the Social Security Act of 1935 established the UI and Social Security systems. Widespread economic hardship experienced in the 1930s had a huge impact on the nation’s conscience and contributed to a sea change in the view of the role of the government in the United States. People in need began looking to the government, as opposed to families and other social institutions, as the primary provider of assistance. Social...

    • 4 Improving Opportunities and Incentives for Saving by Middle- and Low-Income Households
      (pp. 93-124)
      WILLIAM G. GALE, JONATHAN GRUBER and PETER R. ORSZAG

      Most Americans expect a substantial period of retirement. Workers tend to leave the labor force as they approach their mid-sixties. For example, the share of men participating in the labor force falls from more than 66 percent among those ages fifty-five to sixty-four to under 20 percent for those sixty-five and older; for women, labor force participation declines from over 50 percent in the fifty-five-to-sixty-four age bracket to just slightly more than 10 percent for those sixty-five or older. Yet, in their mid-sixties, most people still have a significant life expectancy. A sixty-five-year-old man now has an average life expectancy...

  6. PART II Building a High-Skill Workforce
    • 5 Success by Ten: Intervening Early, Often, and Effectively in the Education of Young Children
      (pp. 127-158)
      JENS LUDWIG and ISABEL SAWHILL

      Children cannot choose their parents. While people disagree about how social policy should treat adults who have been unlucky or unwise, there is something fundamentally unfair about making children’s life chances hostage to the circumstances of their parents. The reality, though, is that family background has a powerful influence on how children develop, beginning early in their lives. Our society’s goal should be to intervene early, often, and effectively in the lives of disadvantaged children from birth to age ten, so that by the end of this period we substantially narrow—or eliminate—disparities in cognitive and noncognitive skills across...

    • 6 Summer Opportunity Scholarships: A Proposal to Narrow the Skills Gap
      (pp. 159-188)
      ALAN B. KRUEGER and MOLLY F. MCINTOSH

      Even in relatively early grades, a large gap in skills is apparent between students from economically advantaged and disadvantaged households. One way to measure the skills gap is to look at the differences between students who were eligible for free or reduced-price lunch and those who were ineligible for the lunch program in their performance on the National Assessment of Educational Progress (NAEP), a test given to a nationally representative sample of fourth-, eighth-, and twelfth-graders. In the 2003 NAEP, which was given to approximately 343,000 fourth-grade students, those who were eligible for free or reduced-price lunch scored an average...

    • 7 Identifying Effective Teachers Using Performance on the Job
      (pp. 189-226)
      ROBERT GORDON, THOMAS J. KANE and DOUGLAS O. STAIGER

      Over the last two decades, policymakers have fretted over the quality of elementary and secondary education in the United States. Worried that the public education system has become a constraint on future productivity growth and a root cause of income inequality, leaders have championed a succession of reforms—from test-based accountability to smaller class sizes. But, ultimately, the success of U.S. public education depends upon the skills of the 3.1 million teachers managing classrooms in elementary and secondary schools around the country. Everything else—educational standards, testing, class size, greater accountability—is background, intended to support the crucial interactions between...

    • 8 College Grants on a Postcard: A Proposal for Simple and Predictable Federal Student Aid
      (pp. 227-260)
      SUSAN M. DYNARSKI and JUDITH E. SCOTT-CLAYTON

      State and federal governments spend billions on financial aid for college students each year. Pell Grants, Stafford Loans, the Hope and Lifetime Learning Tax Credits, and a host of other programs make college less expensive (see table 8-1). The intent of this aid is to increase college attendance. The idea is straightforward: people buy more of a product (college) when its price (tuition) is lower. Price drops, demand increases: that is a lesson learned in any introductory economics course.

      Economics 101 says that federal student aid should increase college attendance. The United States needs aid programs to work: college entry...

    • 9 Investing in the Best and Brightest: Increased Fellowship Support for American Scientists and Engineers
      (pp. 261-288)
      RICHARD B. FREEMAN

      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. Business, science, and education groups have issued reports that highlight the value to the country of leadership in science and technology. Many call for new policies to increase the supply of scientific and engineering talent in the United States (see box 9-1). While the reports differ in emphasis, the basic message is uniform: the United States should spend more on research and development (R&D)...

  7. PART III Creating a Better Tax System
    • 10 The Simple Return: Reducing America’s Tax Burden through Return-Free Filing
      (pp. 291-318)
      AUSTAN GOOLSBEE

      The burden of an income tax can be divided into two parts, one visible and the other hidden. The first burden is obvious—it is the actual tax payment. The second, hidden burden is arises in part when taxes alter the economic decisions that people make. Another major part of that unseen burden, however, comes from the cost of complying with the system: the hours spent preparing forms, gathering documents, and reading instructions; or the money a tax filer pays someone to do the tax preparation.

      This chapter proposes a program called the “Simple Return,” which would make it much...

    • 11 Reforming Corporate Taxation in a Global Economy: A Proposal to Adopt Formulary Apportionment
      (pp. 319-344)
      REUVEN S. AVI-YONAH and KIMBERLY A. CLAUSING

      The current system of taxing the income of multinational enterprises (MNEs) in the United States is flawed across multiple dimensions. The system provides an artificial tax incentive to earn income in low-tax countries, rewards aggressive tax planning, and is not compatible with any common metrics of efficiency. The U.S. system is also notoriously complex: observers are nearly unanimous in lamenting the heavy compliance burdens and the impracticality of coherent enforcement. Furthermore, despite a corporate tax rate 1 standard deviation above that of other members of the Organization for Economic Cooperation and Development (OECD), the U.S. corporate tax system raises relatively...

    • 12 Taxing Privilege More Effectively: Replacing the Estate Tax with an Inheritance Tax
      (pp. 345-382)
      LILY L. BATCHELDER

      The estate tax has been a fixture of the federal tax system for more than ninety years. Together with the gift tax, it has been a fairly stable revenue source over time, generally raising between 1 and 2 percent of federal revenues, as illustrated in figure 12-1. For example, in 2007 the estate and gift taxes raised $26 billion (Office of Management and Budget 2008).

      Nevertheless, in 2001 opponents of the estate tax succeeded in repealing it in a bizarre way. Currently, the estate tax is scheduled to disappear in 2010 and then return one year later. This situation is...

  8. Contributors
    (pp. 383-392)
  9. Index
    (pp. 393-402)
  10. Back Matter
    (pp. 403-404)