“Missed connections” is the personals ads category for people whose encounters are too fleeting to form any union – a lost-and-found for relationships.  I gave that title to my paper on the conversation between the United States and for Europe on data, privacy, and surveillance because I thought it provides an apt metaphor for the hopes and frustrations on both sides of that conversation.

The United States and Europe are linked by common values and overlapping heritage, an enduring security alliance, and the world’s largest trading relationship.  Europe has become the largest crossroad of the Internet and the transatlantic backbone is the global Internet’s highest capacity route.

[I]

But differences in approaches to the regulation of the privacy of personal information threaten to disrupt the vast flow of information between Europe and the U.S.  These differences have been exacerbated by the Edward Snowden disclosures, especially stories about the PRISM program and eavesdropping on Chancellor Angela Merkel’s cell phone.  The reaction has been profound enough to give momentum to calls for suspension of the “Safe Harbor” agreement that facilitates transfers of data between the U.S. Europe; and Chancellor Merkel, the European Parliament, and other EU leaders who have called for some form of European Internet that would keep data on European citizens inside EU borders.  So it can seem like the U.S. and EU are gazing at each other from trains headed in opposite directions.

My paper went to press before last week’s European Court of Justice ruling that Google must block search results showing that a Spanish citizen had property attached for debt several years ago.  What is most startling about the decision is this information was accurate and had been published in a Spanish newspaper by government mandate but – for these reasons – the newspaper was not obligated to remove the information from its website; nevertheless, Google could be required to remove links to that website from search results in Spain. That is quite different from the way the right to privacy has been applied in America.  The decision’s discussion of search as “profiling” bears out what the paper says about European attitudes toward Google and U.S. Internet companies.  So the decision heightens the differences between the U.S. and Europe.

Nonetheless, it does not have to be so desperate.  In my paper, I look at the issues that have divided the United States and Europe when it comes to data and the things they have in common, the issues currently in play, and some ways the United States can help to steer the conversation in the right direction.

[I] "Europe Emerges as Global Internet Hub," Telegeography, September 18, 2013.

This summer, the world has watched as an al Qaeda offshoot, the Islamic State group, launched a militant offensive into Iraq, seizing large swaths of land. This Center for Middle East Policy’s Middle East Memo, Kurdistan Rising: To Acknowledge or Ignore the Unraveling of Iraq, examines how the fall of Iraq’s key city of Mosul has changed matters for Kurds in Iraq, and the necessity for American policymakers to take stock of the reality of the Kurdistan Region in this “post-Mosul” world.

Highlights: 

• A look at the Kurds of Iraq, their history and how the United States has largely spurned a partnership with them. Having been autonomous in Iraq since 1991, the Kurds heeded the aspirations of the United States in 2003 to assist in the removal of the Baath regime of Saddam Hussein, and played by the rules of the game established in the post-2003 period, albeit unwillingly at times. However, they have consistently refused to follow a path that would result in relinquishing the powers they enjoy. They have even taken steps to extend their autonomy to the point of having economic sovereignty within a federal Iraq, thus bringing them into serious dispute with Baghdad and the government of Nouri al-Maliki and earning the rebuke of the United States.

• An examination of how, since 2011, failed U.S. and European policies aimed at healing Iraq’s sectarian and ethnic fissures have contributed to the current situation. By so strongly embracing the concept of Iraq’s integrity as crucial to American interests in the region, key allies and partners have been marginalized along the way.

• Policy recommendations for the United States and its western allies, given that the Kurdistan region now stands on the threshold of restructuring Iraq according to its federal or confederal design, or exercising its full right to self-determination and seceding from Iraq. By ignoring the realities of Kurdish strength in Iraq, U.S. and European powers run the risk of losing influence in the only part of Iraq that can be called a success story, and antagonizing what could be a key ally in an increasingly unpredictable Middle East.

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• Kurdistan Rising: To Acknowledge or Ignore the Unraveling of Iraq

A fair assessment of the budget deal signed by President Obama last week would allow for only at most two cheers. Its biggest achievement is raising the debt limit by enough to last until 2017, thereby at least temporarily eliminating the threat to the nation's credit worthiness. The deal also provides funding levels above the Spartan caps established by the 2011 Budget Control Act so that both domestic discretionary spending and military spending can avoid reductions against a baseline that was already low by historical standards. In addition, the deal avoids a cut in benefits in the Social Security Disability Insurance (SSDI) program that was about to have its trust account run dry, as well as a big increase in payments by a significant minority of Medicare beneficiaries.

That's a lot of good policy, achieved despite the partisanship that has been so characteristic of budget negotiations in recent years. So what's not to like? Two shortcomings of the deal are especially notable. The first is that the solution to the pending SSDI shortfall is disappointing. It would be hard to support the imposition of reduced benefits on recipients of a government insurance program for the disabled, but Congress has known for some years that SSDI was running out of money. Congress should have been working on solutions that involved less spending or more revenue, or perhaps both. Instead, the reforms that Congress passed provided a very minor adjustment in the way both initial and continuing eligibility are determined and ignored more basic reforms. A non-partisan group assembled by former House members Jim McCrery and Earl Pomeroy under the auspices of the Committee for a Responsible Federal Budget (CRFB) produced a host of proposals that would address the underlying problems of the SSDI program such as how to emphasize work to control the rising caseload, but they were virtually ignored. Taking the easy way out, Congress transferred nearly $120 billion in funds from the Social Security Trust Fund into the SSDI Trust Fund. Unfortunately, this action will preserve the SSDI Trust Fund only until 2021 or 2022, at which time it will likely be back in the perilous situation it was in until this temporary fix was put in place.

The second problem is that the lubricant Congress used to enact the deal was money it doesn't have. Thus, according to CRFB, all the spending in the deal cost $154 billion but the offsets in the bill amounted to only $78 billion. Thus, the true net cost of the bill, excluding budget gimmicks, was $76 billion. As always, the money will be obtained by additional borrowing, thereby increasing the nation's debt.

Increasing the nation's debt is the most important shortcoming of the bill. Due to improvements in the economy coupled with spending cuts and revenue increases achieved by previous budget deals reached since publication of the Simpson-Bowles Commission report in 2010, the fiscal outlook for the nation has improved. But the long-term debt problem has not been solved. The Center on Budget and Policy Priorities, based on figures from the Congressional Budget Office (CBO), projects that the ratio of the national debt to GDP will fall slightly from its current 74 percent to 73 percent by 2017. However, the ratio will then rise to 92 percent by 2040. This projection contrasts with the Center's 2010 projection in which the debt-to-GDP ratio increased by more than 200 percent.

Granted, this is good news. But not so fast. The assumptions built into the projections are likely to be too optimistic. The CRFB projects that under a more reasonable set of assumptions, the debt will rise to over 150 percent of GDP by 2040. As CRFB argues, the debt path under these more reasonable assumptions is, though improved, nonetheless "unsustainable."

Equally important, the big picture on the nation's budget shows that future spending increases in Social Security, Medicare and other health programs, and net interest will eat up all future increases in revenue. CBO projects that compared to average spending in these three budget categories between 1965 and 2014, spending as a percentage of GDP by 2040 on Social Security will increase by 55 percent, on federal health programs by 220 percent, and on interest on the debt by well over 100 percent. As a result, spending on everything else will decline by around 40 percent. No wonder a recent report from the Urban Institute shows that the share of federal spending on children has already begun to decline and will fall by nearly 30 percent between 2010 and 2024.

Despite the modest achievements of the latest budget deal, long-term budget prospects continue to look bleak and present spending priorities still emphasize programs for the elderly and interest on the debt while squeezing other programs, including those for children. Perhaps two cheers for the deal is one too many.

Editor's Note: this post first appeared in Real Clear Markets.

Government spending on the elderly continues to climb.  Fueled by rapid growth in the number of Americans over age 65 and increased spending on benefits per person, public expenditures devoted to the elderly continue to edge up. A crucial question for future policy making is whether rising outlays on programs for the aged will squeeze out spending on programs for children, especially investments in their schooling. Many pessimists think this outcome is inevitable, and they urge us to reduce government commitments to the elderly to make room for spending on the young.

Federal spending is especially concentrated on the elderly. The Urban Institute publishes annual estimates of federal outlays on children and adults over 65. The estimates inevitably show a huge imbalance in spending on the two groups. In 2011, federal spending for the elderly amounted to almost $28,000 per person over 65.  In the same year, per capita spending on Americans under 19 amounted to just $4,900 per person. This means aged Americans received $5.72 in federal spending for every $1.00 received by a child 18 or younger.

The Urban Institute’s latest estimates show that federal spending on youngsters has trended down in recent years.  After reaching a peak of about $500 billion in 2010, expenditures on children fell 7 percent by 2012, and they have remained unchanged since then.

Future prospects are not encouraging. Urban Institute analysts predict that from 2014 to 2025, only 2 percent of federal spending growth will go to children. Almost 60 percent will be swallowed up by additional outlays on Social Security, Medicare, and Medicaid. Spending on many federal programs that provide benefits to children are financed out of discretionary programs. In contrast, big public programs for the aged seem to run on automatic pilot, with spending linked to changes in the cost of living and the size of the population past 65. Spending on most domestic discretionary programs is expected to be severely constrained as a result of Congressionally imposed budget caps. This is bad news for many federal programs targeted on children.

Focusing solely on federal government spending gives a misleading picture, however. While federal spending is heavily concentrated on the elderly, state and local spending tilts toward programs that help children, notably, through public school budgets.  Whereas aged Americans receive $5.72 in federal spending for each $1.00 received by someone under 19, those under 19 receive $10.11 in state and local spending for each $1.00 received by someone who is 65 or older. To be sure, total federal spending is considerably greater than that of state and local governments, but the imbalance of public spending on the young and the old is less extreme than federal budget statistics suggest.

Government spending on the aged is high because legislators (and voters) decided to establish government-backed pensions—through Social Security—in the 1930s and government-guaranteed health insurance for the elderly—through Medicare—in the 1960s.  In view of the overwhelming and enduring popularity of these two programs, most voters appear to think this was a sensible choice.  One implication of the policies is that Americans past 65 derive a sizable percentage of their retirement income, and an even bigger share of their health care, from public budgets.

The nation has not made an equivalent commitment to support the incomes or guarantee the health insurance of Americans under 65, except in special circumstances.  Those circumstances include temporary unemployment, a permanent work disability, and low household income.  Families headed by someone under 65 are expected to derive their support mainly from their jobs and from their own savings.  If non-aged families prosper, government spending on them falls.  If instead breadwinners become disabled or lose their jobs, government spending will increase as a result of higher disability payments, unemployment and food stamp benefits, and public assistance rolls.

Nearly all children are raised in families headed by someone under 65.  The government benefits they receive, except for free public schooling, increase in bad times and should decline when the unemployment rate falls.  The Urban Institute’s numbers are instructive.  Between 2007 and 2011, real federal spending on children increased 27 percent, or more than 6 percent a year, as the unemployment rate soared in the Great Recession. Federal spending on children then fell as unemployment—and outlays on government transfer payments—shrank.  For many categories of public spending on children, we cannot assume that lower spending signals a weaker commitment to children’s well-being. Instead it may signal a healthier private economy, a lower unemployment rate, and faster improvement in breadwinner incomes.

Of course, some components of government spending on children do not automatically rise in a slumping economy or shrink when breadwinners’ earnings improve.  Public investments in children’s preschool and K-12 education should be adjusted to reflect the needs of children for compensatory instruction and the expected payoff of added investment in schooling.  Statistics on public school budgets show that spending per pupil has increased considerably faster than inflation and faster than GDP per person over the past seven decades (see Chart 1). Whether spending has increased as fast as warranted is debatable, but rising government spending on the aged has not caused per-pupil spending on K-12 schools to shrink.

Government spending on children’s health has also increased over time as public insurance for children has been expanded.  In 2014 just 6 percent of Americans under age 19 lacked health insurance for the entire year.  The only age group with higher health insurance coverage was the population past 65, which is covered by Medicare (see Chart 2).  The main explanation for rising insurance coverage among children is that federal and state health insurance programs have been expanded to cover most low-income children.  Insurance coverage of children can and should be improved, but a sizeable expansion of public insurance has occurred despite the increase in public spending on the elderly.

The presumption that rising outlays on programs for Americans past 65 must come at the expense of spending on children rests on the unstated assumption that voters will zealously defend programs for the aged while tolerating cuts in programs that fund education, income protection, and health coverage for the young.  The trend toward higher public spending on the elderly has been underway for at least five decades, but the predicted cuts in spending on the young have yet to materialize.

Editor's Note: this op-ed first appeared in Real Clear Markets.

For decades, we have been hearing that the baby-boom generation was like a pig moving through a python–bigger than the generations before and after.

That’s true. But that’s also a very misleading metaphor for understanding the demographic forces that are driving up federal spending: They aren’t temporary. The generation born between 1946 and 1964 is the beginning of a demographic transition that will persist for decades after the baby boomers die, the consequence of lengthening lifespans and declining fertility. Putting the federal budget on a sustainable course requires long-lasting fixes, not short-lived tweaks.  

First, a few demographic facts.

As the chart below illustrates, there was a surge in births in the U.S. at the end of World War II, a subsequent decline, and then an uptick as baby boomers began having children.

Although the population has been rising, the number of births in the U.S. the past few years has been below the peak baby-boom levels, possibly because many couples chose not to have children during bad economic times. More significant, fertility rates–roughly the number of babies born per woman during her lifetime–have fallen well below pre-baby-boom levels.

Meanwhile, Americans are living longer. In 1950, a man who made it to age 65 could expect to live until 78 and a woman until 81. Social Security’s actuaries project that a man who lived to age 65 in 2010 will reach 84 and a woman age 86.

Put all this together, and it’s clear that a growing fraction of the U.S. population will be 65 or older.   

The combination of longer life spans and lower fertility rates means the ratio of elderly (over 65) to working-age population (ages 20 to 64) is rising. As the chart below illustrates, the ratio will rise steadily as more baby boomers reach retirement age–and then it levels off.  

Simply put, this doesn’t look like a pig in a python.  

So what do these demographic facts portend for the federal budget?  In simple dollars and cents, the federal government spends more on the old than the young. More older Americans means more federal spending on Social Security and Medicare, the health insurance program for the elderly. On top of that, health care spending per person is likely to continue to grow faster than the overall economy.

The net result: 85 percent of the increase in federal spending that the Congressional Budget Office projects for the next 10 years, based on current policies, will go toward Social Security, Medicare and other major federal health programs, and interest on the national debt.

Restraining future deficits and the size of the federal debt mean restraining spending on these programs or raising taxes–and probably both. One-time savings or minor tweaks won’t suffice. Nor will limiting the belt-tightening to annually appropriated spending.

The fundamental fiscal problem is not coping with the retirement of the baby boomers and then going back to budgets that resemble those of the past. The fundamental fiscal problem is that retirement of the baby boomers marks a major demographic transition for the nation, one that will require long-lived changes to benefit programs and taxes.

Introduction

President Obama has proposed expanding the Peace Corps and building a global network of volunteers, “so that Americans work side-by-side with volunteers from other countries.” Achieving this goal will require building on the success of the Peace Corps with a new combination of public and private initiatives designed to expand opportunities for volunteers to address critical global problems such as poverty, contagious diseases, climate change, and conflict.

We examine alternative service models, both domestic and foreign, and offer recommendations to the Obama Administration for harnessing the energy and skills of Americans eager to engage in volunteer work in foreign countries as part of a multilateral mobilization effort and smart power diplomacy.

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President Barack Obama’s visit to the George Herbert Walker Bush Library in College Station, Texas this week highlights the crucial role of America’s volunteer traditions in addressing critical issues at home and abroad. The two presidents will commemorate the 20^th anniversary of the Points of Light movement, championed by the 41^st president, and advance the United We Serve initiative of President Obama.

Michelle Nunn, CEO of Points of Light Institute and daughter of former Democratic Senator Sam Nunn noted in Huffington Post that “demand, idealism and presidential impact are leading American volunteerism to its…most important stage – the movement of service to a central role in our nation’s priorities.”

The bipartisan nature of America’s vibrant service movement is also reflected in the landmark Kennedy-Hatch Serve America Act signed into law by President Obama earlier this year and pending Global Service Fellowship legislation introduced by Senators Feingold and Voinovich.

In a recent Brookings Global Views policy brief, “International Volunteer Service: A Smart Way to Build Bridges,” Lex Rieffel, Kevin Quigley and I articulate policy options for the new administration to advance President Obama’s call for engaging service on the global level. President Obama’s speech in Cairo on June 4 called for turning “dialogue into interfaith service, so bridges between peoples lead to action – whether it is combating Malaria in Africa, or providing relief for a natural disaster.”

Following the president’s Cairo speech, the administration assembled a laudable Global Engagement Initiative across the administration to implement and track results in scaling up initiatives of service and interfaith action. The potency of coupling American service with foreign assistance was documented in Indonesia and Bangladesh through successive Terror Free Tomorrow polls showing increased favorable ratings for our nation and decreased support for terrorism.

The Building Bridges Coalition has organized an impressive array of over 210 organizations dedicated to expanding American volunteerism internationally, as part of a new “Service World” policy coalition gearing up for the 50^th anniversary of the Peace Corps. This new “international service 2.0” incorporates NGOs and faith-based groups, universities and corporations as new development actors advocating multilateral service and achieving impacts on issues ranging from Malaria to peacebuilding and climate change.

A Foundation Strategy Group report commissioned by Brookings and Pfizer, “Volunteering for Impact” assessed best practices in the increasing array of international corporations engaging volunteers such as IBM’s Corporate Service Corps, GE Volunteers and Pfizer’s Global Health Fellows.

Around the globe, initiatives such as Cross Cultural Solutions and an emerging global service and peacebuilding alliance in hot spots from Kenya to Mindanao are giving substance to the president’s call in Cairo. The collaboration of Presidents Clinton and G.H.W. Bush on humanitarian assistance after the tsunami, and this week’s service dedication with the Obama administration and former President Bush, bode well for the bipartisan extension of our nation’s noble voluntary service traditions in the international context where they are urgently needed.

An American drone strike that killed leader of the Afghan Taliban Mullah Akhtar Mohammed Mansour may seem like a fillip for the United States’ ally, the embattled government of Afghanistan’s President Ashraf Ghani. But as Vanda Felbab-Brown writes in a new op-ed for The New York Times, it is unlikely to improve Kabul’s immediate national security problems—and may create more difficulties than it solves.

The White House has argued that because Mansour became opposed to peace talks with the Afghan government, removing him became necessary to facilitate new talks. Yet, as Vanda writes in the op-ed, “the notion that the United States can drone-strike its way through the leadership of the Afghan Taliban until it finds an acceptable interlocutor seems optimistic, at best.”

[T]he notion that the United States can drone-strike its way through the leadership of the Afghan Taliban until it finds an acceptable interlocutor seems optimistic, at best.

Mullah Mansour's death does not inevitably translate into substantial weakening of the Taliban's operational capacity or a reprieve from what is shaping up to be a bloody summer in Afghanistan. Any fragmentation of the Taliban to come does not ipso facto imply stronger Afghan security forces or a reduction of violent conflict. Even if Mansour's demise eventually turns out to be an inflection point in the conflict and the Taliban does seriously fragment, such an outcome may only add complexity to the conflict. A lot of other factors, including crucially Afghan politics, influence the capacity of the Afghan security forces and their battlefield performance.

Nor will Mansour’s death motivate the Taliban to start negotiating. That did not happen when it was revealed last July’s the group’s previous leader and founder, Mullah Mohammad Omar, had died in 2013. To the contrary, the Taliban’s subsequent military push has been its strongest in a decade—with its most violent faction, the Haqqani network, striking the heart of Kabul. Mansour had empowered the violent Haqqanis following Omar’s death as a means to reconsolidate the Taliban, and their continued presence portends future violence. Mansour's successor, Mawlawi Haibatullah Akhundzada, the Taliban’s former minister of justice who loved to issue execution orders, is unlikely to be in a position to negotiate (if he even wants to) for a considerable time as he seeks to gain control and create legitimacy within the movement.

The United States has sent a strong signal to Pakistan, which continues to deny the presence of the Afghan Taliban and the Haqqani network within its borders. Motivated by a fear of provoking the groups against itself, Pakistan continues to show no willingness to take them on, despite the conditions on U.S. aid.

Disrupting the group’s leadership by drone-strike decapitation is tempting militarily. But it can be too blunt an instrument, since negotiations and reconciliation ultimately depend on political processes. In decapitation targeting, the U.S. leadership must think critically about whether the likely successor will be better or worse for the counterinsurgency endgame.

On February 9, President Obama submitted his FY 2017 budget request to Congress. The proposed international affairs budget is down 1 percent from current funding levels and 12 percent (in constant dollars) since 2010, better than many domestic accounts. In addition, outside the regular budget, the administration is proposing $1.8 billion ($376 million from the international affairs budget account) to meet the latest pandemic—the Zika virus. Given the budget environment, the proposed amounts for the international affairs budget seem reasonable.

But from a long-term perspective, the budget is alarming. It seems unable to take account of global trends, it relies on fractured and ad hoc processes, and it is excessively siloed into pre-determined sectors.

Being satisfied with relatively small budget cuts does not face the reality of far greater and more pressing challenges today than in 2010. Today, Iraq and Afghanistan are still demanding sizable budget resources. We need to respond to Russia’s muscle-flexing by demonstrating our commitment to its independent neighbors. The effort to move HIV/AIDS to a more sustainable model is commendable but showing minimal success, so U.S. funding cannot slip. The Ebola crisis has been succeeded by the Zika virus. The Middle East is unstable and violent, with half the population of Syria killed or displaced. Sixty million displaced persons is the highest level ever reached. The world is addressing four Level 3 humanitarian crises, an unprecedented number. The fear of terrorism is spreading and disrupting rational political dialogue. Domestic violence and civil strife is increasing in Central America. Free expression is under siege in many countries and civil societies are in need of reinforcement.

Many of these challenges reflect an underinvestment in development in the past. We are using a Rube Goldberg budget system that cobbles together funding from multiple sources for a single objective and locks in funding several years before a penny flows, making it difficult to adjust to changing circumstances.

The budgeting system problem

The 2017 budget uses a gimmick that may not be sustainable. To fund the Iraq war, the Bush administration invented an off-budget account (Overseas Contingent Operations, or OCO, a successor to earlier emergency funding) that does not count against the annual budget caps. The State Department and USAID got part of their budgets starting in 2012 from this account. OCO for FY 2017 is proposed at one-quarter of the international affairs budget. The problem is that OCO cannot be counted on in the long-term, and the sustainable base budget for FY 2017 is down 30 percent from FY 2010 in constant dollars.

The budget process is also absurdly long. The Obama administration began planning the FY 2016 budget in the spring of 2014, roughly 18 months before Congressional appropriations. Typically, it could take another six months for agency officials and appropriation committees to agree on country and program allocations. Only then, 30 months later, can U.S. development professionals working overseas get on with the business of putting those resources to work.  

This budget process, with its long timeframes and pre-determined earmarks and presidential initiatives, means that despite best efforts by USAID, it is difficult to respect “local ownership” of development—something that development experience demonstrates is fundamental to successful and sustainable development.

Presidential initiatives have their place as a way to bring along political allies and the American populace. It is also appropriate and constructive for Congress to weigh in on funding priorities. But it can be counterproductive to effective development when presidential initiatives and congressional earmarks dictate at the micro level and restrict flexibility in implementation, especially in a rapidly changing world with frequent crises. 

Another problem with the current budget system is that most but not all sectors are protected by budget accounts or earmarks. Health is protected and the funding divided into various sub-accounts. Education and agriculture get earmarks. New in the FY 2016 appropriations bill is a separate line item for democracy.

Another structural issue is the crisis-reactive nature of our assistance programs. Health, which garners the lion’s share of U.S. economic assistance, has been dominated for nearly two decades by responses to global crises — first massive funding for combatting HIV/AIDS, followed by significant funding to tackle malaria, Ebola, and now the Zika virus. It is funding by individual disease. Crisis galvanizes political and popular support for the here and now. But what if we had focused on building up national health systems for the last 20 years rather than fighting one-off diseases? If we moved to more preventive approaches now, maybe in 10 or 20 years the pandemic of the day could be met less by the U.S. ramping up in a crisis mode and more by the health systems in those countries affected, with the U.S. playing a supportive and technical role rather than the core funding role. 

These issues are examples of why it is imperative for the next administration and congress to engage in a strategic dialogue on the objectives and priorities of foreign assistance programs, both in funding levels and how the funds are used. It is time to move away from the current structure that resembles building a Cadillac from parts of models stretching from 1949 to 1973, as in the Johnny Cash song "One Piece at A Time.”

Figure 1: How we build our budget

Source: Abernathyautoparts, CC BY-SA 2.5

It is not unrealistic to envisage a more strategic approach. One option is to return to the approach in the 1970s, when all development funding was put into one of just five or six functional accounts, and provide some flexibility in moving funds between accounts.

Policymakers who believe that America is an exceptional or indispensable nation and that world problems do not get solved without American involvement need to take a hard look at whether they are providing the U.S. government with the required diplomatic and development tools. It is high time for U.S. policymakers to take a more strategic approach to the level of funding of international affairs and how the U.S. uses its foreign assistance. The inauguration of a new president and Congress in 2017 offers the opportunity to seize this challenge.

In the summer of 1978, my grandfather George Washington Timmons, my cousin George, and I took the train from the Midwest across Canada and the ferry up the Pacific coast to Alaska. There we met up with my brother Steve, who was living in Anchorage. It was the trip of a lifetime: hiking, and fishing for grayling, salmon and halibut in Denali park, on the Kenai peninsula, Glacier Bay, and above the Arctic Circle in a frontier town called Fort Yukon, camping everywhere, and cooking on the back gate of my brother’s pickup truck. 

That Gramps had a Teddy Roosevelt moustache and a gruff demeanor gave the adventure a “Rough Riders” flavor. Like Teddy, the almost-indomitable GWT had given me a view of how experiencing a majestic land was a crucial part of becoming a robust American man. When we got home, he was diagnosed with lung cancer and died just a few months later.

We project all kinds of cultural images and values on the green screen of the American landscape. Those endless late June sunsets in the Crazy Mountains and the sun on the ragged peaks of the Wrangell Mountains represent for me a sense of the vastness of the state of Alaska and the need to balance preservation there with the needs of its people for resources and income. Certainly there is enough space in Alaska to drill for oil and protect large swaths in wildlife refuges and national parks. As leaders of the Inupiat Eskimo corporation put it in a letter to Obama, “History has shown us that the responsible energy development, which is the lifeblood of our economy, can exist in tandem with and significantly enhance our traditional way of life.”

Unfortunately, this view is outdated: that was the case in Alaska, but there is a new, global problem that changes the calculus. As President Obama wraps up his historic visit to Alaska and meeting with the Arctic climate resilience summit (GLACIER Conference), he is walking a razor’s edge, delivering a delicately crafted missive for two audiences. Each view is coherent by itself, but together they create a contradictory message that reflects the cognitive dissonance of this administration on climate change.

For the majority of Alaska and for businesses and more conservative audiences, Obama is proclaiming that Alaskan resources are part of our energy future. With oil providing 90 percent of state government revenues, that’s the message many Alaskans most ardently want to hear.

For environmentalists and to the nations of the world, Obama is making another argument. His stops were chosen to provide compelling visual evidence now written across Alaska’s landscape that climate change is real, it is here, Alaskans are already suffering, and we must act aggressively to address it. “Climate change is no longer some far-off problem; it is happening here, it is happening now … We’re not acting fast enough.”

This is a razor’s edge to walk: the Obama administration is criticized by both sides for favoring the other. Those favoring development of “all of the above” energy sources say that Obama’s Clean Power Plan has restricted coal use in America and that future stages will make fossil fuel development even tougher in future years.  These critics believe Obama is driving up energy costs and hurting America’s economic development, even as oil prices drop to their lowest prices in years.

“Climate hawks” on the other hand worry that we are already venturing into perilous territory in dumping gigatons of carbon dioxide and other gases causing the greenhouse effect into the atmosphere. The scientific consensus has shown for a decade that raising global concentrations of CO2 over 450 parts per million would send us over 3.6 degrees F of warming (2 degrees C) and into “dangerous climate change.” The arctic is warming twice as fast as this global average, and though we are still below 1.8 degrees F of warming, many systems may be reaching tipping points already.

Already melting permafrost in Alaska releases the potent greenhouse gas methane, and wreaks havoc for communities adapted to that cold. Foundations collapse and roads can sink and crumble. The melting of offshore ice makes coastal communities more vulnerable to coastal erosion, and allows sunbeams to warm the darker water below, leading to further warming.

The difficulty is that we have a limit to how much greenhouse gases we can pump into the atmosphere before we surpass the “carbon budget” and push the system over 3.6 degrees F. Which fossil reserves can be exploited and how much of which ones must be kept in the ground if we are to stay within that budget? Realistic and credible plans have to be advanced to limit extraction and combustion of fossil fuels until we have legitimate means of capturing and sequestering all that surplus carbon somewhere safe. It is a dubious and risky proposition to say that we can continue to expand production here in America, and that only other countries and regions should cap their extraction.

Obama got elected partly due to his not rejecting natural gas and even coal development. He kept quiet about climate change during his entire first term and he and Mitt Romney had a virtual compact of silence on the issue during the 2012 campaign. But in his second term, Obama has become a global leader on the issue, seeking to inspire other countries to make and keep commitments to sharply reduce emissions. This work has yielded fruit, with major joint announcements with China last November, with Mexico in March, and a series of other nations coming in with pledges. The administration has been seeking to push the pledging process to keep our global total emissions below 3.6 degrees F.

However a just-released UNEP report shows that all the pledges so far—representing 60 percent of all global emissions—add up to 4-8 gigatons of carbon reduction in what would have been emitted. That’s progress, but the report goes on to show that we are still 14 gigatons short of where we need to be to stay under 3.6 degrees F. Indeed, Climateactiontracker.org reports that we are still headed to 5.5 degrees F of warming (3.1 C) with these pledges, down from 7 degrees without the pledges.

This puts the administration and U.N. officials in the position of having to decide which message to put out there—the hopeful message that emissions are being reduced, or the more frustrating one that they are not being reduced nearly enough. Environmentalists are in a similar position with Obama in Alaska—do they criticize him for allowing Shell to drill in the Arctic, or praise him for being generally constructive in this year’s effort to reach a meaningful treaty in Paris in December? Is it possible to kiss Obama on one cheek while slapping him on the other?

This is the delicate political moment in which we find ourselves. Fossil fuel projects continue to be built that will lock us in to carbon emissions for decades to come. They will certainly push us over the “carbon budget” we know exists and beyond which human civilization may be untenable on this planet. But these projects are advanced by extremely strong economic actors with mighty lobbying and public relations machines, and flatly opposing them is likely to lead to one’s portrayal as a Luddite seeking to send humanity back to the stone age. Clean energy alternatives exist, and they are increasingly affordable and reliable. Logically, we need to be spending the remaining carbon budget to make the transition to a net zero emissions economy, not to continuing the wasteful one we have now.

Players on both sides of this debate will seek to deploy Alaska’s majestic landscape to win their case. I’m fairly sure on which side my grandfather George Washington Timmons would have stood: he was a building contractor and would sometimes estimate the number of 2x4s one could harvest from a giant tree. But he didn’t know about the global carbon budget—he loved his children and grandchildren, and I think he would have supported living within our means if he was fully aware of this problem. The original Rough Rider Teddy Roosevelt himself went from avid hunter to devoted conservationist as he learned of the damage over-cutting was causing American forests. As Obama said in Alaska, “Let’s be honest; there’s always been an argument against taking action … We don’t want our lifestyles disrupted. The irony, of course, is that few things will disrupt our lives as profoundly as climate change.”

That is the political razor’s edge the president—and all of us—have to walk today, as we make the inevitable transition away from fossil fuel development.

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On March 4, The India Project at Brookings hosted an online panel discussion to review the first full-year budget released by Prime Minister Narendra Modi’s government on February 28, 2015. Panelists discussed the significance of the budget, key takeaways, the hits, and misses, as well as what actions they would like to see the Indian government take vis-à-vis the Indian economy over the next few months. Panelists included James Crabtree, Mumbai bureau chief for the Financial Times; Eswar Prasad, the New Century Chair in International Trade and Economics at the Brookings Institution and senior fellow in Brookings’s Global Economy and Development program; and Shamika Ravi, fellow at the Brookings India Center in Delhi, in the Development Assistance and Governance Initiative at Brookings, and in Brookings’s Global Economy and Development program. Tanvi Madan, fellow in the Foreign Policy program and director of The India Project at Brookings, moderated the discussion.

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Thank you. I am honored to be here at the City Club of Cleveland, and I'd like to express my thanks to Jim Foster and Bud Talbott for extending the invitation. As you may know, Bud's son is now the president of Brookings, where I work. I'm told that Bud has particularly high standards, and I suppose if I don't live up to them this afternoon, I may hear about it back at work next week.

My topic today is the U.S. budget deficit and its effects. In 2003, the budget deficit amounted to slightly less than $400 billion. That's about 3½ percent of GDP. Under reasonable projections, the deficit is expected to remain about this share of the economy over the next decade – and then grow much larger as the costs mount from the retirement of the baby boomers.

The title of my talk asks whether these deficits matter. I assume that a simple "yes" would not suffice in this intellectually rigorous environment. So I'll spend most of my talk describing the various ways in which substantial budget deficits are economically harmful, and then provide some thoughts on how we can bring the deficit under control.

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In an era of fluid geopolitics and geoeconomics, challenges to the global order abound: from ever-changing terrorism, to massive refugee flows, a stubbornly sluggish world economy, and the specter of global pandemics. Against this backdrop, the question of whether leader summitry—either the G-7 or G-20 incarnations—can supply needed international governance is all the more relevant. This question is particularly significant for East Asia this year as Japan and China, two economic giants that are sometimes perceived as political rivals, respectively host the G-7 and G-20 summits. 

On April 18, the Center for East Asia Policy Studies and the Project on International Order and Strategy co-hosted a discussion on the continued relevancy and efficacy of the leader summit framework, Japan’s and China’s priorities as summit hosts, and whether these East Asian neighbors will hold parallel but completely separate summits or utilize these summits as an opportunity to cooperate on issues of mutual, and global, interest.

Join the conversation on Twitter using #G7G20Asia

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The European Union’s international partners often accuse it of not speaking with a single voice on key global issues. Yet, there are instances when Europe does display a coherent approach to policy-making in international affairs. In this paper for the Center on the United States and Europe, Matteo Garavoglia argues that EU Election Observation Missions (EU EOMs) are a worthy example of such occurrences.

Unlike in most other foreign policy domains, EU supranational institutions, rather than national capitals, lead EOMs' policymaking. More specifically, the European External Action Service’s Democracy and Electoral Observation Division, the European Commission’s Foreign Policy Instrument, and the European Parliament’s Directorate for Democracy Support are the key actors behind this policy area.

Writing for Brookings’s U.S.-Europe Analysis Series, Matteo Garavoglia investigates why European supranational actors are at the core of EOMs policymaking. Having done so, he analyzes the role that national governments and non-institutional agents play in conceptualizing and operationalizing EOMs. Finally, he explores ways in which Europe’s international partners could build bridges with Brussels in this policy area.

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While significant progress has been made in terms of facilitating greater access to and use of financial services among underserved populations, barriers to financial inclusion remain. The global dialogue surrounding the financial inclusion gender gap (referring to the disproportionate exclusion of women from access to and usage of formal financial services) has intensified as key stakeholders—including financial service providers, regulatory bodies, policymakers, civil society entities, and consumers—explore how best to engage prospective women customers in ways that meet the needs of both consumers and providers situated within different market contexts.

As part of the consultation process for the second annual Brookings Financial and Digital Inclusion Project (FDIP) report and scorecard, to be published in late summer 2016, the FDIP team held a roundtable in March 2016 to facilitate dialogue and knowledge-sharing regarding the issue of gender disparities in access to and usage of formal financial services. The first FDIP report and scorecard, published in August 2015, are available here.

The roundtable provided an opportunity for participants to discuss the legal, policy, and cultural drivers of the gender gap, highlight examples of enabling approaches in countries that have made strides in reducing the gender gap, and identify action steps for governments, financial service providers, and consumers in terms of promoting greater equity within the financial landscape. Before diving into the key themes and action items explored at the roundtable, below is some background on the nature and implications of the gender gap.

What is the financial inclusion gender gap, and why does it matter?

From 2011 to 2014, the percentage of women in developing economies with formal financial accounts increased by 13 percentage points, according to the World Bank’s Global Financial Inclusion (Global Findex) database. In relative terms, these gains were comparable to those among men in developing economies during the same time period—but in absolute terms, there remains considerable room for growth, as half of women in developing economies still did not have formal financial accounts as of 2014.

While there is good reason to celebrate the tremendous gains made across the financial inclusion landscape in recent years, significant opportunity for expanding access to and usage of financial services among women remains. Globally, the financial inclusion gender gap remained at seven percentage points between 2011 and 2014, and in developing economies the gap was even higher, at nine percentage points.

The FDIP focus countries reflect this global trend. Of the 21 FDIP focus countries examined within the 2015 FDIP Report and Scorecard, only four (Indonesia, the Philippines, Mexico, and South Africa) exhibited either gender parity or a greater percentage of women than men who reported using mobile money within the previous 12 months or holding an account at a bank or another type of financial institution.

The gender gap is of course not the only global disparity in terms of access to and usage of financial services—for example, rural and low-income populations are often underserved by formal financial service providers compared with their more urban and wealthier counterparts. (You can learn more about financial inclusion among these underserved groups across different economic, political, and geographic contexts in the 2015 FDIP Report and Scorecard.) Indeed, in 2014 the gap between account ownership among the poorest 40 percent of households in developing economies and the richest 60 percent of households in developing economies was about five percentage points higher than the gender gap in developing economies.

However, as noted by the Global Findex, the global financial inclusion gender gap remained essentially static from 2011 to 2014, while the financial inclusion income gap was reduced by several percentage points. Additionally, the increase in ownership of formal accounts among the poorest 40 percent of households in developing economies was slightly higher proportionately than the increase in ownership of formal accounts among women in developing economies over the same period. In short, the gender gap is particularly noteworthy for its persistence over time and for the broad scope of the underserved population it represents.

Investing in women and girls should be a shared priority across public and private sector stakeholders given the economic and civic implications of female participation in the formal financial ecosystem. From a micro perspective, having convenient access to a suite of quality financial services enables women to invest in themselves, in their families, and in their communities by saving for the future, paying for educational and health expenses, putting money toward small businesses, and engaging in other productive financial activities. Participants at the roundtable noted that a less tangible—but no less valuable—outcome of facilitating access to and usage of formal financial services among women is the sense of empowerment many women feel when they are equipped with greater control of their finances.

For businesses, reaching an untapped segment of the market with products and services that individual customers find useful would augment providers’ revenue. From a macroeconomic perspective, women’s economic empowerment has increasingly been regarded as “contributing to sustained inclusive and equitable economic growth, and sustainable development,” as noted in a recent study by the Global Banking Alliance for Women in partnership with Data2X and the Multilateral Investment Fund of the Inter-American Development Bank.

If women’s participation in the financial ecosystem is so advantageous, why hasn’t the gender gap improved?

A number of legal, policy, and cultural restrictions have constrained access to and usage of financial services among women. A few examples of these constraints are described below; additional information on access and usage barriers is available in the 2015 FDIP Report.

• Legal, regulatory, and policy barriers: The World Bank Group’s Women, Business, and the Law project has examined data regarding legal and regulatory restrictions on entrepreneurship and employment among women since 2009. The project’s 2016 report found that about 90 percent of the 173 economies covered in the study had at least one law impeding women’s economic opportunities. For example, in some countries women are not permitted to open a bank account or are required to provide specific permission or additional documentation that is burdensome (or even impossible) to obtain. Restrictions on whether property is titled in a women’s name can also impede access to finance since titled land is often a preferred form of collateral among banks. Moreover, women are less likely than men to have the identification documents needed to open formal financial accounts. Among adults without an account at a financial institution as of 2014, 17 percent of women stated that a lack of necessary documentation was a barrier to their use of an account. Promoting a unique, universal identification system can facilitate access to formal labor markets and formal financial services.
• Cultural barriers: One example of a cultural constraint on usage of financial services among women is that many women may be more comfortable utilizing formal financial services when they can interact with a female point of contact, which is often not a readily available option.  
• Technological barriers: Digital financial services such as mobile money can help mitigate financial access barriers, in part by enabling women to more easily open accounts and to complete transactions through their phones without visiting a “brick and mortar” store. However, the gender gap in mobile phone ownership and usage must be addressed to fully take advantage of the benefits of digital financial services. The GSMA’s 2015 report noted that the most frequently cited barrier to mobile phone ownership and usage was cost, and cultural dynamics in which men prohibit women from owning or using a phone also contribute to the gap. Incongruous policies in some markets such as more stringent registration processes for SIMs and mobile money accounts than for bank accounts can also inhibit adoption of digital financial services.

What are examples of initiatives to facilitate greater financial inclusion among women?

Participants highlighted several examples of initiatives that were designed to promote women’s financial inclusion. For example, Diamond Bank in Nigeria and Women’s World Banking developed a savings product called a BETA account that could be opened over the phone with no minimum balance and no fees. The product was designed to be affordable and convenient for individuals engaging in frequent deposits, with agents visiting customers’ businesses to facilitate transactions. Other add-on products are being built around this basic product to provide more opportunities for individuals to use the financial services most useful to them. While the product was developed for women, it is available to both men and women.

Also in Nigeria, MasterCard and UN Women have partnered on an initiative that aims to educate women on the benefits of a national identification program and enroll half a million Nigerian women in this program so that they receive identification cards that include electronic payments functionality.

What can be done to advance gender equity within the financial ecosystem?

One of the central questions discussed during the roundtable was how to reconcile the sometimes diverging mandates of businesses, public sector actors, and the development community in order to foster a sustainable financial and economic ecosystem. In short, businesses must generate profits to be sustainable, while development community and public sector entities often focus on longer-term micro- and macro-economic growth and development. The challenge with these potentially competing time horizons is that initiatives involving a complex network of participants (such as those to cultivate women’s financial participation) may take time to scale. Moreover, some of the major factors contributing to the financial inclusion gender gap (such as lower financial literacy levels among women) will require a long-term approach to fully address.

The good news is that serving women customers ultimately meets the complementary objectives of benefiting providers by expanding their customer base and benefiting consumers by enabling them to use financial services to improve their lives and invest in their communities. Thus, leveraging data to present the business case to providers (see point 1 below) and promoting dialogue across public and private sector representatives (see point 2 below) will enable different players in the financial ecosystem to identify the best approaches to closing the gender gap in ways that are sustainable for consumers and providers.

While the list below is certainly not exhaustive, it highlights several pathways for promoting women’s financial inclusion.

1. Generate data to better serve customers and attract providers: While we delineate the gender gap in terms of men and women, women (like all customer segments) are not monolithic. Thus, the intent of demand- and supply-side data collection should be to inform the development and delivery of a suite of products and services that target customer segments and to make a business case for offering those products and services. Many financial institutions have historically refrained from collecting data disaggregated by sex because doing so was perceived as discriminatory and/or ineffective given the issue of duplicability in reporting. Government leadership on collecting sex-disaggregated data can help ameliorate this issue. An in-depth look at the process of collecting and analyzing sex-disaggregated data is provided in the recent case study on Chile published by the Global Banking Alliance for Women, Data2X, the Economic Commission for Latin America and the Caribbean, and the Multilateral Investment Fund of the Inter-American Development Bank.
2. Promote inward and outward-facing stakeholder collaboration: Financial service providers and non-government entities active within the financial services landscape should find champions of women’s economic empowerment within their organizations to help build strategies for reaching women customers with appropriate products and services. Representatives from both the public and private sectors should work together to facilitate dialogue and collaboration across relevant stakeholders such as telecommunications providers, formal and informal financial institutions, public sector representatives, and consumers. This objective should be reflected in countries’ national financial inclusion strategies where possible.
3. Engage in client-centric design: Providers should deploy relevant data to evaluate customers’ needs and reflect those needs in product design, provision, and promotion. By thinking about the customer experience of access and usage holistically, providers will have the potential to sustainably amplify adoption of financial services.
4. Invest in financial education and financial capability among women and girls: Many women feel that they do not have enough money to hold an account with a formal financial institution, as evidenced by the 2014 Global Findex results noting that 57 percent of women without an account at a financial institution cited having insufficient funds as a barrier to account ownership. Financial inclusion stakeholders should aim to familiarize prospective female customers with appropriate, affordable financial services and promote sound financial behaviors that will help spur greater financial inclusion.
5. Adapt anti-money laundering/countering the financing of terrorism requirements to reflect perceived risks: Enabling risk-based “know your customer” (KYC) processes such as the tiered KYC approach applied in the Diamond Bank example above or in other countries such as Mexico reduces access barriers to formal financial accounts. For more information on KYC processes among different countries, please see the 2015 FDIP Report and Scorecard.
6. Formalize informal financial entities as appropriate: According to the 2014 Global Findex, about 160 million unbanked adults in developing economies saved through informal savings clubs or a non-family member. Vetting and formalizing certain informal providers to ensure adequate consumer protection while preserving services that are familiar and accessible to customers could advance women’s financial inclusion.
7. Leverage digital financial tools to facilitate greater access to and usage of formal financial services:
• Digital platforms can help reduce disparities in access to identification documents. For example, an initiative in Tanzania allows health workers to deliver birth certificates using a mobile phone. Birth certificates facilitate access to healthcare, education, and other important government services, including government-to-person payments.
• Digital financial services such as mobile money can provide greater privacy, convenience, and security to customers who have been disproportionately excluded from the formal financial system. For more information on developing enabling infrastructure and policy environments to support mobile money access and usage, please refer to the 2015 FDIP Report.
• Using “big data” generated by and about consumers on digital platforms helps providers better evaluate the creditworthiness of individuals who may previously have been excluded from the formal financial system due to a lack of or minimal credit history. Since women often lack credit history, these innovative measures to assess credit risk and collateral issues can contribute to women’s economic empowerment by facilitating access to credit. As with all financial services, these “big data, small credit” propositions should be coupled with adequate consumer protection and privacy mechanisms.

An American drone strike that killed leader of the Afghan Taliban Mullah Akhtar Mohammed Mansour may seem like a fillip for the United States’ ally, the embattled government of Afghanistan’s President Ashraf Ghani. But as Vanda Felbab-Brown writes in a new op-ed for The New York Times, it is unlikely to improve Kabul’s immediate national security problems—and may create more difficulties than it solves.

The White House has argued that because Mansour became opposed to peace talks with the Afghan government, removing him became necessary to facilitate new talks. Yet, as Vanda writes in the op-ed, “the notion that the United States can drone-strike its way through the leadership of the Afghan Taliban until it finds an acceptable interlocutor seems optimistic, at best.”

[T]he notion that the United States can drone-strike its way through the leadership of the Afghan Taliban until it finds an acceptable interlocutor seems optimistic, at best.

Mullah Mansour's death does not inevitably translate into substantial weakening of the Taliban's operational capacity or a reprieve from what is shaping up to be a bloody summer in Afghanistan. Any fragmentation of the Taliban to come does not ipso facto imply stronger Afghan security forces or a reduction of violent conflict. Even if Mansour's demise eventually turns out to be an inflection point in the conflict and the Taliban does seriously fragment, such an outcome may only add complexity to the conflict. A lot of other factors, including crucially Afghan politics, influence the capacity of the Afghan security forces and their battlefield performance.

Nor will Mansour’s death motivate the Taliban to start negotiating. That did not happen when it was revealed last July’s the group’s previous leader and founder, Mullah Mohammad Omar, had died in 2013. To the contrary, the Taliban’s subsequent military push has been its strongest in a decade—with its most violent faction, the Haqqani network, striking the heart of Kabul. Mansour had empowered the violent Haqqanis following Omar’s death as a means to reconsolidate the Taliban, and their continued presence portends future violence. Mansour's successor, Mawlawi Haibatullah Akhundzada, the Taliban’s former minister of justice who loved to issue execution orders, is unlikely to be in a position to negotiate (if he even wants to) for a considerable time as he seeks to gain control and create legitimacy within the movement.

The United States has sent a strong signal to Pakistan, which continues to deny the presence of the Afghan Taliban and the Haqqani network within its borders. Motivated by a fear of provoking the groups against itself, Pakistan continues to show no willingness to take them on, despite the conditions on U.S. aid.

Disrupting the group’s leadership by drone-strike decapitation is tempting militarily. But it can be too blunt an instrument, since negotiations and reconciliation ultimately depend on political processes. In decapitation targeting, the U.S. leadership must think critically about whether the likely successor will be better or worse for the counterinsurgency endgame.

Despite widespread agreement that the federal budget is on an unsustainable path, there is also widespread disagreement about what should be done. The Hamilton Project asked leading experts from a variety of backgrounds—the policy world, academia, and the private sector, and from both sides of the political aisle—to develop and share their ideas for addressing the deficit. The proposals will be released at two events scheduled for February 22 and February 26. In a dialogue previewing those events, Hamilton Project Director Michael Greenstone and Policy Director Adam Looney discuss some of the key ideas offered by the experts.

Greenstone stresses that the goal of the papers is to move beyond the fights and disagreements between President Obama and Congress and to provide some of the poetry, or some of the details, on how government might run better. The papers will also be featured in a book, 15 Ways to Rethink the Federal Budget, and will take on a wide-ranging set of topics, including immigration, transportation, health care, defense spending, and tax expenditures.

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In an era of fluid geopolitics and geoeconomics, challenges to the global order abound: from ever-changing terrorism, to massive refugee flows, a stubbornly sluggish world economy, and the specter of global pandemics. Against this backdrop, the question of whether leader summitry—either the G-7 or G-20 incarnations—can supply needed international governance is all the more relevant. This question is particularly significant for East Asia this year as Japan and China, two economic giants that are sometimes perceived as political rivals, respectively host the G-7 and G-20 summits. 

On April 18, the Center for East Asia Policy Studies and the Project on International Order and Strategy co-hosted a discussion on the continued relevancy and efficacy of the leader summit framework, Japan’s and China’s priorities as summit hosts, and whether these East Asian neighbors will hold parallel but completely separate summits or utilize these summits as an opportunity to cooperate on issues of mutual, and global, interest.

Join the conversation on Twitter using #G7G20Asia

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The new 2013 budget unveiled by President Obama on Monday again contains the Automatic IRA, which was developed by Brookings' Retirement Security Project in conjunction with The Heritage Foundation. This year's version again includes an important change that will also encourage more employers to offer a 401(k) account to their workers. However, important changes to the Saver's Credit, which had been in previous budgets failed to make it this year.

Nearly half of American workers - an estimated 78 million- currently have no employer-sponsored retirement savings plan. The Automatic IRA is a simple, easy to administer and understand system that is designed to meet the needs of small businesses and their employees. Employers facilitate employee savings without having to sponsor a 401(k)-type plan, make matching contributions or meet complex eligibility rules. Employees are enrolled automatically into an IRA with a simplified system of investment choices and a set automatic savings level. However, they retain complete control over all aspects of the account including how much to save, which investment choice to use, or even to opt out completely. Automatic IRAs also offer savings options for the self-employed, for independent contractors, as well as providing those who are changing jobs the ability to continue their retirement savings.

The new 2013 budget would also double the size of the tax credit that employers receive in return for starting a new 401(k) plan from $500 annually for three years to $1,000 annually for the same period. This increase will ensure that the credit covers more of an employer's costs, and should encourage more employers to offer such a plan. This is a very good move, but the credit could be still further expanded to $1,500 for three years as will be proposed by a new House bill coming from Rep. Richard Neal. As Congress examines the proposal, it will have the opportunity to also expand the smaller credit that would be offered to employers that start an Automatic IRA to ensure that they are fully reimbursed for all expenses connected with starting and operating such an account for their workers.

A disappointing development is the failure to again include proposals to expand and improve the Saver's Credit by making it fully refundable. The Saver's Credit is an incentive for middle-and lower-income taxpayers to save in 401(k)-type accounts or IRAs. Retirement Security Project research found that more than 69 million taxpayers had income that was low enough for them to be eligible for the Saver's Credit in 2007. However, nearly 45 million of these filers actually failed to qualify for the credit because they had no federal tax liability. If the Saver's Credit was made refundable as RSP has proposed and deposited directly into the account as a match for savings, those 45 million taxpayers could have taken advantage of the program and had significantly higher retirement savings.

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In an era of fluid geopolitics and geoeconomics, challenges to the global order abound: from ever-changing terrorism, to massive refugee flows, a stubbornly sluggish world economy, and the specter of global pandemics. Against this backdrop, the question of whether leader summitry—either the G-7 or G-20 incarnations—can supply needed international governance is all the more relevant. This question is particularly significant for East Asia this year as Japan and China, two economic giants that are sometimes perceived as political rivals, respectively host the G-7 and G-20 summits. 

On April 18, the Center for East Asia Policy Studies and the Project on International Order and Strategy co-hosted a discussion on the continued relevancy and efficacy of the leader summit framework, Japan’s and China’s priorities as summit hosts, and whether these East Asian neighbors will hold parallel but completely separate summits or utilize these summits as an opportunity to cooperate on issues of mutual, and global, interest.

Join the conversation on Twitter using #G7G20Asia

Audio

• Japan’s G-7 and China’s G-20 chairmanships: Bridges or stovepipes in leader summitry?

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20160418_g7g20_transcript