Morning Brief: The Case for Reorganizing Government

In an op-ed in Politico, Jeff Zients, acting director of the Office of Management and Budget, and John Engler, former republican governor of Michigan, argue for increasing presidential power to reorganize the federal government. Until the 1980s, presidents could submit reorganization plans to Congress for an up-or-down vote. Restoring this authority to presidents, they claim, would enable quick congressional approval to consolidate duplicative programs. Reducing overlap would shrink government costs and could accelerate economic growth by reducing the time and effort it takes for individuals and firms to comply with regulations.

In January, the Obama administration announced a proposal to consolidate the efforts of six trade and commerce agencies.  This piece by CFR's Jonathan Masters discusses this opportunity, differing proposals, and the debate among policy experts.

Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.

How Some Multinationals Avoid Taxation

Justin Fox describes how large multinationals can use extensive foreign operations and differing tax treatments to avoid paying almost any taxes (HBR). Firms with extensive overseas operations and a high reliance on intellectual property—such as Google, Apple, Pfizer, and GE—can locate subsidiary operations to create complex corporate structures and internal licensing agreements. These structures can shift profits between locations to take advantage of tax treaties and loopholes to shield profits from all governments, in effect creating stateless income.

CFR’s Ted Alden discusses the need to reform corporate taxation to keep the United States competitive. In addition to lowering statutory rates closer to levels of the other countries in the Organization for Economic Cooperation and Development (OECD), the United States should move to a territorial tax system—as most of the world has already done—to remove the disincentive to repatriate profits.

Corporate regulation and taxation. Read more from top economists and business experts on solutions for addressing corporate tax reform.

Virginia to Sell Highway Naming Rights

For years, corporations have purchased stadium naming rights; Virginia will begin selling highway naming rights (BBC). This novel approach to infrastructure funding is expected to raise $109 million, roughly 3 percent of the state’s total highway budget. A firm that puts its brand onto a highway can stand out to customers flooded by advertising but risks being associated with the congestion and delays of a bad morning commute.

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.

Mobile Data Competitors Emerge

Echoing how Skype and other Voice over IP (VOIP) providers drove down voice rates, new companies are emerging to offer consumers a cheaper alternative for mobile data (Bloomberg). New start-ups are leveraging WiFi hotspots and Clearwire’s 4G network to deliver novel consumer offerings and to compete with AT&T and Verizon Wireless. Falling data rates—new entrants to the Canadian market undercut prices by 83 percent—would allow new data-hungry mobile applications and web services to thrive.

Outgoing FBI Cybersecurity Chief Sounds Alarm

In a recent interview, Shawn Henry, the FBI’s top cyber cop, warned of widespread U.S. internet security failure (WSJ).  Many attacks come from overseas, particularly from China. Valuable innovations are targets; hackers recently stole over $1 billion worth of R&D in a single attack. Not only are firms vulnerable, but detecting a security breach is difficult. One cybersecurity firm reported that 94 percent of U.S. victims of Chinese attacks first learned of security breaches from outsiders, and on average it took 416 days to detect a breach.

Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.

Steven J. Markovich holds an MBA from the University of Chicago’s Booth School of Business.