Amtrak proposed a $7 billion project to revamp Union Station (WashPost). The Washington, DC station that opened in 1907 is the train service’s second busiest, and its overcrowded tracks prevent further expansion of train capacity. The long term plan runs through 2030 and includes the addition of six tracks for high speed rail service. Construction plans for the next five years are relatively modest, up to $300 million. The strategy for financing the project has not been determined.
Lawmakers continue to debate the costs and benefits of investment in the U.S. rail network, with high speed rail a key issue. This CFR Backgrounder summarizes the historical development of freight and passenger rail as well as policy concerns and options facing lawmakers.
California’s $14 Billion Water Plan
California Governor Jerry Brown and Interior Secretary Ken Salazar announced a $14 billion plan to remake Southern California’s water supply (NYT). While few details were revealed, the plan will include the construction of twin highway-sized 35-mile long pipelines to bring water from further north on the Sacramento River; the plan will also include financial incentives for consumers to decrease water use. Any water program faces a difficult challenge in balancing the conflicting needs and desires of homeowners, farmers, and environmentalists.
Infrastructure. Read more on how upgrading the nation’s aging network of roads, bridges, airports, railways, and water systems is essential to maintaining U.S. competitiveness.
Corporate Regulation and Taxation
Geithner Testifies on Libor Manipulation
Treasury Secretary Timothy Geithner testified yesterday on the amount of information the New York Fed shared with other regulators about the about alleged manipulation of Libor interest rates (TheHill). Geithner argued the New York Fed—of which he was president in 2008—appropriately alerted other regulators to its concerns, but some lawmakers deemed its actions inadequate. John Gapper, chief business commentator of the Financial Times, describes the difficulties regulators face in balancing the need to discipline wayward firms, while also preventing the collapse of weak financial institutions during a crisis.
In late June, Barclays bank agreed to pay $453 million to U.S. and U.K. regulators to settle allegations that it had manipulated Libor to maximize its own profits; other banks may be implicated as the scandal unfolds. This CFR Backgrounder by Christopher Alessi breaks down the Libor Scandal.
Sandy Weill Calls for Breaking up Big Banks
The architect of Citigroup, Sandy Weill, called for the breakup of large U.S. financial conglomerates (WSJ). On CNBC, he said: “I am suggesting that they be broken up so that the taxpayer will never be at risk, the depositors won't be at risk.” His comments stand in stark contrast to his zeal for acquisitions at Citigroup, and his advocacy for the repeal of laws that separated commercial and investment banking, such as 1933’s Glass-Steagall, experts say.
The 2010 Dodd-Frank Act—one of the most significant regulatory reform measures since the Great Depression—continues to arouse debate over its methods, goals, and implementation. This Backgrounder by Steven J. Markovich examines the financial oversight bill.
Corporate regulation and taxation. Read more from top economists and business experts on solutions for addressing corporate tax reform.
Education and Human Capital
Measuring the Skills Gap
The staffing agency ManpowerGroup released its survey of U.S. employers, which found a yawning skills gap (Bloomberg). According to the U.S. labor department, firms have reported more than 3 million job openings every month since February 2011; companies point to a shortage of good workers with necessary skills. ManpowerGroup also announced findings that U.S. employers are less likely to invest in training than overseas competitors. Some firms are partnering with local non-profits and educational institutions to develop the local workforce.
Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.
Why Investors Replace a Founder
The Harvard Business Review discusses what motivates venture capital investors to replace a startup’s founder. When a firm is doing poorly, the urge to replace leadership is understandable, but difficult as a floundering startup is unlikely to attract top turnaround talent. For a startup doing well, investors can disagree with the pace and scale of a founder’s strategy to monetize the company, but CEOs brought in from the outside often have less understanding of the business and struggle to quickly bond with the startups employees.
In the face of persistently high unemployment, policymakers and workers look to innovation and entrepreneurship, the primary engine of U.S. job growth over the past thirty years. This CFR Backgrounder by Steven J. Markovich discusses how entrepreneurs create and finance startups and the ramifications of policies such as the JOBS Act.
Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.
The Morning Brief is compiled by Renewing America contributor Steven J. Markovich.