Morning Brief: GOP Mulls Tying Pipeline to Highway Bill

Republican leaders in the House plan to attach provisions to yet another extension of the highway bill to pressure the Obama administration on the proposed Keystone pipeline (TheHill). The TransCanada project would bring oil from Alberta’s tar sands to U.S. refineries. With elections looming in November, Congress is expected to pass a tenth temporary extension to the federal transportation funding bill before funds end at the end of June rather than pass a longer term measure.

Scott Thomasson, the president of NewBuild Strategies and an expert on infrastructure funding, recently authored Encouraging U.S. Infrastructure Investment, a Policy Innovation Memo released by the CFR’s Renewing America initiative. Thomasson proposes new initiatives aimed at breaking through the legislative gridlock.

Debt and Deficits

How to “Work Around” the Buffett Rule

Bloomberg reports that tax planners will have many tools to avoid the proposed “Buffett Rule” including tax-free municipal bonds, timing asset sales, charitable contributions, and non-taxable transactions. A partner at a major New York accounting firm said: “Largely, the Buffett rule is going to be manageable. That is, with tax planning, people will be able to avoid it.” This week, the Obama administration has campaigned for its proposal to set a minimum tax rate for millionaires (TheHill)—through television appearances by the president, and a revamped website.

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.

International Trade and Investment

Protecting Intellectual Property in China

At a Beijing roundtable with business and government attendees, American and Chinese officials praised progress on protecting intellectual property (WSJ). Experts indicate that China has given increasing attention to IP enforcement, but much work remains. Gary Locke, the U.S. ambassador to China, said: “China's IP system still makes it difficult for both foreign and Chinese companies to compete on a level playing field." While many U.S. firms praise increased Chinese enforcement, other firms—such as Apple—are being brought to court for infringement.

The U.S. Commerce Department yesterday released a detailed study finding that IP-intensive industries contribute $5 trillion and 40 million jobs to the U.S. economy.

International trade and investment. Read more from leading analysts on the debate over next steps in U.S. trade policy.

Education and Human Capital

Education Grabs Voter Attention

Across the United States, voters are paying greater attention to education, an issue which may prove pivotal in several November elections (Education Week). Earlier this month, the College Board released a survey of voters in swing states; 67 percent deemed education “extremely important” for White House and congressional elections. Governors are also facing increased scrutiny from voters, particularly as federal policy moves toward greater state autonomy, and competitive federal grants.

The new report of the CFR Independent Task Force on U.S. Education Reform and National Security highlights the importance of the Common Core State Standards and asserts that fixing the nation’s underperforming K-12 schools is critical to economic competitiveness and national security.

Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.

Innovation

Changing Climate for Alternative Energy

BrightSolar Energy decided to cancel its planned initial public offering amid a weakening solar market (NYT). The firm’s prospects dimmed as solar power demand has fallen with declining government subsidies in the United States and Europe, and record low U.S. natural gas prices. The Obama administration had touted the job creation potential of solar energy and other cleantech, but Reuters reports that “green jobs” are slow to grow.

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