The Social Security Trust Fund projects it will exhaust all funds by 2035 (Bloomberg). This projection, which is for the overall program, is three years earlier than previous estimates. Various components of the program will deplete their trust funds earlier: 2016 for the Social Security disability program, and 2024 for Medicare. Once the shortfall between yearly funding and benefits cannot be patched with the trust fund, experts expect lawmakers will have to choose between higher taxes, reforming the programs, or diverting general federal income.
As the United States continues to run budgets with high deficits, politicians debate different plans to reduce government costs and to raise revenue. This CFR Backgrounder by Jonathan Masters outlines the competing policy paths on federal fiscal reform, and the global consequences for failing to bring down U.S. debt.
Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.
International Trade and Investment
International Trade Commission Rejects Duties
The U.S. International Trade Commission (USITC) considered allegations of dumping of galvanized steel wire by Chinese and Mexican producers, and voted 4-2 against imposing duties (WSJ). Earlier this month, the USITC ruled against a Commerce Department proposal to impose antidumping or countervailing duties on imported Chinese car wheels, and refrigerators from South Korea and Mexico. Experts have found recent rulings unusual, and claim that the USITC has generally ruled in favor of U.S. companies in the past two years.
International trade and investment. Read more from leading analysts on the debate over next steps in U.S. trade policy.
Southern Californian Water Fight
San Diego’s water agencies are locked in a battle over water delivery rates (NYT) with a consortium of municipalities that represents nineteen million southern Californians. While San Diego purchases its water from other sources, it needs to pay its neighbors to use their pipes to bring the water to the city. San Diego argues recent fee increases are exorbitant; the consortium set 5 percent increases for each of the next two years, after initially proposing 7.5 percent hikes.
Scott Thomasson, the president of NewBuild Strategies and an expert on infrastructure funding, recently authored "Encouraging U.S. Infrastructure Investment," a Policy Innovation Memorandum released by the CFR’s Renewing America initiative. Thomasson proposes new initiatives to address crumbling U.S. infrastructure.
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.
Cautioning against Crowdfunding
While proponents of the recently passed JOBS Act tout the expansion of “crowdfunding,” Daniel Isenberg argues venture equity crowdfunding “cannot work” (HBR). He identifies four major problems: dissimilarity to successful charitable crowdfunding, lack of standardization, expensive due diligence, and “crowds are frequently stupid.” At best, he believes that entrepreneurs and middlemen may benefit from cheaper financing, but small investors will bear large risk in ventures after making uninformed decisions.
Asteroid Mining Announcement
Planetary Resources Inc. is expected to announce plans today to mine asteroids (NYT). The venture is backed by big names such as Google’s Larry Page and Eric Schmidt and also movie director James Cameron. While the audacious plan has attracted significant media attention, the immediate goal is more modest. The firm plans to launch a small space telescope within two years to find suitable asteroids to target.
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.