Income Tax Versus Consumption Tax: A Taxing Tale

Changing the U.S. income tax system to a consumption tax system is appealing. The Senate Finance Committee is considering the consumption-tax idea. It's thought that this method of taxing would boost economic growth. Consumption tax would tax money spent instead of income earned. John D. McKinnon further explains consumption tax in his article, "Tax Proposals Would Move U.S. Closer to Global Norm." Below is that article.

As lawmakers have examined a tax overhaul, “it becomes extremely difficult to see a political path to accomplish it” within the confines of the current income-tax system, said Sen. Ben Cardin (D., Md.), co-chairman of a Finance Committee working group negotiating a possible overhaul of business taxes.

As a result, the idea of a consumption tax “is getting a great deal more respect, and it is in the discussions,” he said.

Mr. Cardin introduced legislation last year to create a type of consumption tax known as a value-added tax and at the same time lower business taxes and scrap income taxes completely for lower-income Americans.

Republicans on the working group also are interested in the concept, including a proposal put forward recently by GOP Sens. Marco Rubio of Florida and Mike Lee of Utah. That plan would make several changes to the tax code that would move the nation closer to a consumption-based system.

Many GOP members “believe that there are economic benefits to moving away from taxation of income and toward taxation of consumption,” a Senate aide said. That includes Republican John Thune of South Dakota, co-chairman of the working group along with Mr. Cardin, the aide said.

As the name implies, consumption-style taxes hit the money taxpayers spend, rather than income they receive. One prominent feature of consumption systems is that they generally tax savings and investment lightly or not at all. That, in turn, encourages more investment and innovation, and ultimately more growth, many economists contend.

The U.S. tax system already has some features of a consumption system, such as tax-advantaged retirement-savings accounts and lower rates for investment income. In general, though, the consumption-tax proposals being floated would go much further.

The plans vary widely in their details. They include European-style value-added taxes, a type of sales tax that is collected along each stage of the production process; traditional sales taxes; and taxes on carbon-based pollution.

Some of these proposals would have consumers pay another tax in addition to existing state and local sales taxes, while others would merely reshape the current system to tilt it more toward consumption.

The discussions are in early stages. The likelihood that senators will agree on a consumption tax—or any major overhaul—in current negotiations remains slim. Introducing such a different tax system also brings the fear of the unknown.

Still, the talks open up a possible new direction in slow-moving discussions about rewriting the U.S. tax system. Enactment of a broad-based federal consumption tax would align the U.S. with a global trend. In the U.S., most of those taxes now are in the form of state and local sales taxes.

Until now, efforts in Congress to revamp the tax system largely have focused on rewriting the income-tax rules. The most prominent was a plan put forward last year by then-Ways and Means Chairman Dave Camp (R., Mich.) that would have lowered rates for businesses and individuals while paring back deductions.

But that approach, some lawmakers contend, faced a basic mathematical problem, particularly on the business side: The U.S. corporate tax rate is the highest in the developed world, and lowering it substantially would require eliminating a large number of tax breaks to avoid adding to budget deficits. That could offset any economic benefit of lower rates.

Many experts believe moving to a consumption tax would ease the difficult policy task, at least on paper. While there is still lively debate about the relative merits of income and consumption taxes, some economists believe consumption taxes encourage more savings and lead to faster economic growth.

Some liberals are concerned that consumption taxes affect poor people disproportionately, while unduly benefiting the rich, unless adjustments are made. For their part, conservatives fear that some types of consumption tax—particularly value-added taxes—would make it too easy to dial up government revenue collection.

Some lawmakers also worry about the potential impact on the federal deficit, particularly if Congress relies too much on estimates of a future economic boost.

Both of the leaders of the tax-writing committees in Congress, Rep. Paul Ryan (R., Wis.) and Sen. Orrin Hatch (R., Utah), say they are intrigued by the consumption-tax approach, while acknowledging some potential drawbacks.

“There’s a lot of merit” to a consumption-tax system, said Ryan spokesman Brendan Buck. As the House Ways and Means Committee thinks long-term about a tax overhaul, the consumption-tax approach is one that will be considered, he added.

The Obama administration declined to comment. President Barack Obama’s aides have been critical of some consumption-tax proposals, particularly sales-tax ideas that they view as unfair to lower- and middle-income households.

“I would not count on consumption-tax regimes to replace the income tax, given the need for [more] revenue,” said Harry Stein of the liberal Center for American Progress.

Write to John D. McKinnon at [email protected]

The Connection with Cuba (O La Conexión con Cuba)

The United States and Cuba, long frozen in a political stalemate lasting more than half a century, could finally be turning towards a more open and collaborative relationship with each other. This is exciting news for both citizens and businesses looking to travel, exchange culture and develop trade opportunities. On December 17, 2014 both Barack Obama and Raul Castro held simultaneous press conferences announcing their intention to begin normalizing diplomatic and trade relations. Given the deep and stormy history, reconnecting with Cuba serves as an important and symbolic step for connecting with the rest of Latin America.

While discussions likely started well before December, the administrations no doubt had this week in mind when they made their original announcement.  Starting Friday, April 10th is an important meeting for the entire Western Hemisphere: the Summit of the Americas hosted in Panama City.

In preparation for this week's summit and for an upcoming business trip, the Chamber of the Americas brought in an internationally renowned expert on US-Cuba relations, Arturo Lopez-Levy. In addition to being a professor on Latin American politics and comparative politics, the Cuban-American has in fact written the book on "Raul Castro and the New Cuba". ICOSA Media and the Colorado Business Roundtable would like to thank Gil Cisneros and Laura Frigo from the Chamber of the Americas for bringing in such a high caliber expert on this timely subject.

While the luncheon was not filmed, he covers a small selection of the same perspective below in this interview following the December 17th announcements. For future events and for information regarding the upcoming trip to Cuba, please visit http://www.chamberoftheamericas.com/

You can read more about US-Cuba relations from Arturo's perspective here or by following him on twitter @turylevy

The State of Immigration: U.S. is Far Behind in the Race for Global Talent

The Business Roundtable has found that the U.S. is Far Behind in the Race for Global Talent.

Based on a comprehensive examination of 10 advanced economies to identify and evaluate the best immigration policies to promote economic growth, the United States ranked 9th out of 10 competitor countries, ahead of only Japan, a country historically closed to outsiders.

This analysis found that America’s near-bottom ranking among major advanced economies is due to U.S. laws and regulations that impose unrealistic numerical limits and excessive bureaucratic rules on hiring workers that the country’s economy needs.

For example, while Germany has a high approval rate for skilled foreign workers, the US limits the number of H-1B visas so much so that they run out almost immediately. In fact, starting today, the United States Citizenship and Immigration Services agency starts assigning H-1B visas for the year. By next week, the full 65,000 cap will be reached. Demand far outpaces supply.

This morning in the Wall Street Journal, Gary Beech writes about the issue. He, like many people on both sides of the political spectrum, is advocating for the removal of the H-1B visa cap. Start learning more about the arguments for and against this action by reading his full article here: http://blogs.wsj.com/cio/2015/04/01/remove-the-h1b-visa-cap/

It's a bipartisan opinion: let skilled, hardworking employees and entrepreneurs build their businesses here in America.

(Click the Business Roundtable graphic to view the full size)

Volvo Plant in U.S.

State to be chosen in a month; car maker says labor rates are just part of it

Written by John D. Stoll of The Wall Street Journal

After years of losing out to Mexico in the race for new automotive assembly plants, the U.S. is about to notch a victory.

Volvo Car Corp., owned by a Chinese company, will spend $500 million to build a new vehicle plant in the U.S. The decision comes weeks after Daimler AG plans to spend a half-billion dollars to build a Mercedes-Benz van factory in South Carolina, a move that followed a string of auto makers choosing to locate new factories in Mexico instead of the U.S.

In an interview, Chief Executive Håkan Samuelsson said Volvo is making the move to smooth out its international presence. With plants in Europe and China, the executive wants a North American factory to be closer to one of its prime markets, take advantage of attractive labor rates and protect against currency fluctuations.

“This will complete our industrial footprint,” Mr. Samuelsson said. Volvo is also aiming to reiterate its commitment to the U.S., a market it has been in since 1957. In recent years, Volvo has struggled to sell cars in the U.S., forcing the auto maker to adjust its strategy several times.

Mr. Samuelsson said Volvo is still considering a handful of states for its new factory, and will announce its pick in about a month. The plant will build vehicles off the company’s new “SPA” platform, an engineering architecture that will serve as the blueprint for several vehicles, including the new XC90 SUV hitting the market this year.

Volvo, bought by Zhejiang Geely Holding Group Co. in 2010, sold 466,000 vehicles in 2014, a record amount of cars globally. But momentum has come from gains in China and Europe; U.S. sales fell 8% to 56,000—short of the 100,000 vehicles Mr. Samuelsson says the brand needs to prove viability.

Mr. Samuelsson said there is no current plan to share the plant with Geely. Volvo is, however, working with its partner on developing small cars, and the factory could eventually be an avenue for the Chinese auto maker to distribute cars in the U.S.

For now, Mr. Samuelsson is working to freshen the product lineup, boost marketing spending and offer better financing options.

Some European auto makers have been successful at capping labor costs in the U.S. Volkswagen recently opened a plant in Tennessee, and its hourly labor rate—including benefits—equals $38 an hour, $10 less than Fiat Chrysler Automobiles and $20 less than General Motors Co.

Volvo’s move stems the tide of investment aimed at Mexico, where labor rates are a fraction of the U.S. costs. Auto makers and parts suppliers have earmarked more than $20 billion of new investments, with many executives citing an array of free-trade pacts as the reason for the decisions.

Mr. Samuelsson said Volvo considered Mexico, but the benefits of building cars in the world’s most-profitable market tipped the decision in America’s direction.

Write to John D. Stoll at [email protected]

U.S. Dollar's Strength Weighs on Inflation

Justin Lahart says inflation's direction is a result of both the strength of the U.S. Dollar and job market. Lahart predicts that the strength of the dollar will for the next few months be the more important factor in determining inflation.  Lahart continues his article below; The Labor Department on Tuesday reported that consumer prices rose 0.2% in February from January, putting them even with their year-earlier levels. Core prices, which exclude food and energy, also rose 0.2%, for a year-over-year gain of 1.7%. The report implies that the Federal Reserve’s preferred measure of core inflation from the Commerce Department was up 1.4% on the year last month, calculates Morgan Stanley, still well below the Fed’s 2% target.

ENLARGE

What’s more, annual core inflation figures will likely ease in the months ahead. One reason is that there was a run of fairly strong readings last spring, so the marking of their anniversaries will limit comparative price gains.

But the more important factor will be the dollar.

The currency’s strength, despite losing a little ground over the past week, is already taking a bite out of inflation. Prices for core goods, which include items easily traded across borders, such as car tires, were 0.5% below their year-earlier level last month. Given that there is a lag between moves in the dollar and when these show up in prices, core goods prices will likely show further weakness in the months ahead.

Prices for core services, which aren’t so easy to trade (think haircuts) were up 2.5% versus a year earlier. That is in keeping with the trend of the past three years, indicating that despite increased spending power provided by an improving job market, consumers still aren’t willing to pay up.

The Fed last week signaled that it isn’t likely to start raising rates until September. The way things are going, even that expectation may need trimming back.

Write to Justin Lahart at [email protected]

Ted Cruz Announces 2016 GOP Presidential Bid

Conservative Texas senator Ted Cruz is first to announce a run.

"I'm running for President and hope to earn your support!" Ted Cruz announced Monday via Twitter. Janet Hook, of the Wall Street Journal writes about Ted Cruz's politics.

By Janet Hook

Texas Sen. Ted Cruz, whose combative approach to politics has helped guide the Republican Party’s right wing, entered the 2016 presidential race on Monday, kicking off a primary-election debate about how aggressively conservative the GOP should be as it seeks to recapture the White House.

“I’m running for president,” Mr. Cruz said in a Twitter post, becoming the first major candidate of either party to enter the race and heightening his national visibility.

The announcement by Mr. Cruz marks the beginning of the primary election battle to define a Republican Party that is divided about the balance between ideology and pragmatism, and which is uncertain about who should lead it. His candidacy comes as recent polls indicate that none of the likely candidates has yet emerged as a bridge-building consensus choice among the party’s factions.

Mr. Cruz will be planting his flag on the far right flank of what is expected to become a crowded primary field spanning an ideological spectrum from centrists, such as New Jersey Gov. Chris Christie, to the libertarian Kentucky Sen. Rand Paul and social conservatives like Mike Huckabee, a former governor of Arkansas.

Mr. Cruz stands for a brand of ideological conservatism that contrasts with former Florida Gov. Jeb Bush, who has said a successful presidential candidate must be willing to “lose the primary”—that is, risk angering the party’s most conservative followers—to succeed with the more centrist electorate in the general election.

By contrast, Mr. Cruz has sometimes angered congressional leaders by pushing for conservative goals, such as ending the Democratic-backed Affordable Care Act and President Barack Obama’s immigration policy, at the cost of provoking gridlock in Washington. He was widely blamed for helping to prompt the 2013 government shutdown, an effort to unwind the 2010 health law that many Republicans say wound up damaging the party’s image.

Mr. Cruz is scheduled to speak Monday at Liberty University, a Christian college in Lynchburg, Va., founded by the Rev. Jerry Falwell.

Mr. Cruz’s early presence in the field could pressure other potential candidates to move to the political right on fiscal policy, social issues and on the tactics for pursuing policy goals, particularly among contenders who are trying to establish themselves as the leading conservative alternative to Mr. Bush.

Sen. Ted Cruz announced his bid for the presidency on Twitter. Photo: Associated Press

“Cruz has the potential to take up quite a bit of space on the right in the conservative primary-within-the-primary,” said Kevin Madden, a veteran GOP campaign strategist. “The candidates looking to grab the mantle of being the antiestablishment choice for voters will certainly start to feel pressure to match Cruz step for step and not allow themselves to get outflanked to their right.’’

Mr. Cruz argues that the GOP repeatedly has lost the White House because it has rejected strict conservatives in favor of more centrist candidates.

“If we run another candidate in the mold of a Bob Dole or a John McCain or Mitt Romney, we will end up with the same result, which is millions of people will stay home on Election Day…If we run another candidate like that, Hillary Clinton will be the next president,” Mr. Cruz said in a 2014 CNBC interview.

By jumping in first for the most wide-open GOP nomination fight in a generation, Mr. Cruz is hoping to claim a measure of visibility. Other potential candidates are preparing to formally declare their bids in the coming weeks.

Well known public figures like Messrs. Bush and Christie seem to be in less of a rush to launch races and inaugurate a more intense stage of campaigning and scrutiny.

Still in his first term—he was elected in 2012—Mr. Cruz has used his place in the Senate to define himself as one of the most ardent conservatives and as more aggressive than party leaders in fighting for policy goals. One example came in 2013, when he delivered a 21-hour speech on the Senate floor to dramatize his opposition to funding for the health-care law.

He highlighted that contrast in a recent video he called “Truth,” which implied that other Republican candidates offer more talk than action.

“Obamacare: When have you stood up and fought against it?” Mr. Cruz said in the video. “President Obama’s illegal and unconstitutional executive amnesty: When have you stood up and fought against it?” he asked, referring to the president’s actions, without congressional approval, to shelter many illegal immigrants from deportation.

Mr. Cruz’s supporters contend he is in a good position to appeal to voters across party lines who are disillusioned with the political system. “There is clearly a frustration in this country with the status quo, and people are looking for something new and something different,” said Saul Anuzis, former chairman of the Michigan Republican Party.

But Mr. Cruz’s Republican critics say he is too polarizing to be a strong general election candidate.

“He thinks he has a formula for energizing conservatives, but he doesn’t have the skill or inclination to reach out to other people,” said Pete Wehner, a Republican strategist who worked in the George W. Bush White House. “I don’t think he’s got much appeal beyond the core base of the Republican Party.”

A Wall Street Journal/NBC News poll this month suggested that Mr. Cruz had work to do to boost himself among Republican primary voters. Some 40% said they could see themselves backing him for president, while 38% said they couldn’t.

Democrats already are criticizing Mr. Cruz as someone outside the mainstream on issues including climate change, which Mr. Cruz has said isn't supported by science.

“That man betokens such a level of ignorance and a direct falsification of the existing scientific data…[he] has rendered himself absolutely unfit to be running for office,” said California Gov. Jerry Brown, speaking Sunday on NBC.

Write to Janet Hook at [email protected]

Self-Driving Cars in 30 U.S. Cities by 2017

There will be driverless buses and pods as well.

By Sage Lazzaro | 03/05/15 10:47am

Originally appearing in the Observer

Finally, we can put up our feet and let computers take the wheel.

Automated vehicle pilot projects will roll out in the U.K. and in six to 10 U.S. cities this year, with the first unveiling projected to be in Tampa, Florida as soon as late spring. The following year, trial programs will launch in 12 to 20 more U.S. locations, which means driverless cars will be on roads in up to 30 U.S. cities by the end of 2016. The trials will be run by Comet LLC, a consulting firm focused on automated vehicle commercialization.

“We’re looking at college campuses, theme parks, airports, downtown areas—places like that,” Corey Clothier, a strategist for automated transportation systems who runs the firm told, The Observer.

He explained that they’re focusing on semi-controlled areas and that the driverless vehicles will serve a number of different purposes—both public and private. The vehicles themselves—which are all developed by Veeo Systems—will even vary from two-seaters to full-size buses that can transport 70 people. At some locations, the vehicles will drive on their own paths, occasionally crossing vehicle and pedestrian traffic, while at others, the vehicles will be completely integrated with existing cars.

What would happen if you combine driverless cars with an on-demand service like Uber? One study says it would make nine out of ten cars on every road totally obsolete.

One of the early test sites will be the U.S. Army’s Fort Bragg in North Carolina. There, small pod-like vehicles will transport wounded troops from their barracks to the nearby hospital for treatment and check-ups. The Comet team is also planning a pilot project at The United States Military Academy at West Point, although Mr. Clothier said this site has not been finalized.

An automated vehicle system will also be implemented at Stanford with its first purpose being to provide transportation around their SLAC National Accelerator Laboratory campus. Scientists and academics travel from all over the world to visit the center, and the first application of the automated vehicle system will be to transport visiting scientists to the accelerator.

At the first test site in Tampa, the plan is to start with public transit around the Museum of Science and Industry and eventually expand to the University of Southern Florida campus and the neighboring City of Temple Terrace. The Comet team is also planning trials in two other cities in Florida; Greenville, South Carolina and Seattle, Washington, where the 70-person buses will be used in public transit.

At 25 to 40 percent cheaper, the cost to ride the driverless public transit vehicles will be significantly less expensive than traditional buses and trains, according to Mr. Clothier. They’ll also be far less expensive to operate. The vehicles are electric, rechargeable and could cost as low as $1 to $3 to run per day.

In addition to these first trials of automated vehicles for commercial use in the U.S., the U.K. will begin running tests this year in Greenwich, London as well. The $9 million project called GATEway will consist of public self-driving shuttles that will link residents to transport hubs, The O2 Arena and other destinations in northern Greenwich, carrying eight to ten passengers at a time.

Greenwich was chosen for the Project—which is being led by the U.K.’s Transport Research Laboratory (TRL)—because, since it’s home to the Prime Meridian.

“It is the global reference point for time and links to navigation,” Nick Reed, the TRL academy director, said. “It also has a massively growing population, so we’re trying to meet the needs of that with the technology.”

Upon entering the shuttles, each passenger chooses from the pre-determined destinations on the touch screen, and then the computer determines and readjusts the route as riders hop on and off. Each vehicle uses lasers to build up an image of the route and determine where it is and where it needs to go.

These shuttles will drive along their own route but must cross pedestrian and vehicle traffic at times. The lasers will also enable the cars to determine when it’s safe to cross and also to spot obstructions. At a recent launch event, the vehicles proved how safe they are and how well they can sense obstructions and the world around them.

“You can image a lot of the journalists wanted to see this thing run into pedestrians, so they were almost jumping in front of it,” Mr. Reed said laughing. “But it was doing what it was supposed to do and stopping.”

He also explained that these shuttles are only the first part of the trials. They’re also working on autonomous valet parking that would enable drivers with ordinary cars to pull up to their destination, send their car to park itself and then summon it later. Additionally, they’re beginning to research how automated vehicles can be used for grocery delivery and other urban services.

Mr. Reed feels that this technology won’t completely replace today’s cars and trains, but that it is disruptive and will be the norm soon.

He described his first experience in a driverless vehicle as feeling “vulnerable at first,” but said that it quickly became very comfortable.

“It’s a bit unnerving to begin with because you realize the system is in control and you’re relying on the sensors and brakes to keep you safe, but very quickly after seeing it respond to pedestrians and such, you see it work and become very comfortable. I became relaxed even,” he said, adding how happy we’ll all be to be able to just watch Netflix while our cars drive us around.

Mr. Clothier, who has been riding in automated vehicles since their military-only days and has even been passenger to a computer among semis driving at 65mph on a Michigan highway, feels similarly.

“It’s a whole new thing, but it will be comfortable,” he said. “People are very comfortable riding in [them]. It’s kind of like an elevator: you go in, put in your destination, the doors close and you’re off.”

SEE: Mercedes-Benz’s New Car Is Driverless

Correction: The SLAC National Accelerator Laboratory participated in the Smart America Challenge as a possible future pilot site but a trial is not set to run there at this time.

Getting Past the Partisan Passions of Netanyahu’s Speech

National security need not become hyperpoliticized in today’s Washington

"Tuesday’s speech to Congress by Israeli Prime Minister Benjamin Netanyahu will be half foreign-policy event, half partisan spectacle, which raises a question: Is this a sign that national security, once thought to be at least slightly above the political fray, is becoming just another exercise in today’s polarized Washington?"

Answer: not necessarily.

By Gerald F. Seib of the WSJ

Let’s be honest. Foreign-policy debates have always been tinged with partisanship. And on the key questions of the hour—a nuclear deal with Iran and the battle against Islamic State extremists—there’s more crossing of partisan lines than current rhetoric suggests.

Still, there’s a danger that this week’s spectacle will inject a big new dose of partisanship into areas where it’s better left at bay. Once Mr. Netanyahu leaves town, it will be time for cooler heads in both parties to prevent that from happening.

The danger arises for two reasons, unique to the Netanyahu visit. The first is that this week’s event is out of the norm. It isn’t routine for a House speaker of one party to invite a foreign head of government to address Congress without consulting with a White House controlled by the other party. That’s particularly true when everyone knows the point of the speech will be to try to stop a presidential initiative—in this case the nuclear deal with Iran that the administration is trying to negotiate.

So this was inevitably going to be seen as a partisan act, as it would have been if the roles were reversed. It’s not hard to imagine what the Republican reaction would have been if a House Speaker Nancy Pelosi had invited a European head of state to address a joint session of Congress to question President George W. Bush’s request for authorization to go to war in Iraq.

The second reason this moment feels different is that the controversy affects American support for Israel’s government, an area that both sides have at least tried to keep above partisanship.

Add to those factors the sometimes “toxic” relationship between the Republican Congress and President Barack Obama and you have the makings of a broader partisan overlay, says Richard Haass, president of the Council on Foreign Relations and one of the few figures who maintains good lines of communications with both parties. The danger, he adds, is that “resentment from one issue carries over into the other,” getting in the way of, for example, Republicans’ working with Democrats on free-trade issues.

That doesn’t have to be the case, though. History provides ample evidence that the country can move beyond partisan splits on big foreign-policy issues. Republican isolationists battled Democratic President Franklin Roosevelt over providing aid to Britain before the U.S. entered World War II, for example, and the historic congressional vote on the Lend-Lease Act authorizing the aid fell largely along party lines.

When Congress faced a similarly dramatic moment in relations with Israel, in 1981 at the dawn of Republican Ronald Reagan’s presidency, the debate again had political overtones. The issue then was the Reagan administration’s decision to sell advanced Awacs radar planes to Saudi Arabia, a move Israel vehemently opposed. The sale was approved in the Senate largely along party lines, when Mr. Reagan prevailed on fellow Republicans to fall in line. (Irony of the week: Today, Israel probably is happy Congress approved that Awacs sale because the Saudis now are aligned with Israel in staunchly opposing Iran’s growth as a regional power.)

And congressional votes authorizing both wars with Iraq—the first sought by President George H.W. Bush and the second by the younger Mr. Bush—fell heavily along partisan lines.

More telling are the times when partisanship has been shoved aside in big foreign-policy debates. During the Cold War, arms-control treaties were pushed through Congress by leading foreign-policy thinkers of both parties, working in unison. Democratic President Bill Clinton relied on Republican votes to get free-trade deals through Congress. By the end of his presidency, Lyndon Johnson could count more on Republicans than Democrats for support of his policies in the Vietnam War.

And in 2001, the resolution authorizing use of force against al Qaeda passed both houses of Congress on a combined vote of 508 to 1.

The key is to get past the partisan emotions let loose this week and back to a national-security debate driven as much by conviction as party loyalty. That should be doable.

On an actual Iran deal, for example, Mr. Obama may find himself in the odd position of being supported by Republican Sen. Rand Paul—and opposed by Democratic Sen. Chuck Schumer. And on the equally important question of authorizing the fight against Islamic State, Republicans are more likely to back Mr. Obama than are many Democrats. Which isn’t a bad thing for the system.

Write to Gerald F. Seib at [email protected]

Putin’s Culture of Fear and Death

Boris Nemtsov threw his big body, big voice and big heart into the uphill battle to keep democracy alive in Russia.

Garry Kasparov, speaks openly about Putin's Russia. ___________

By GARRY KASPAROV As posted on WSJ March 1, 2015

Boris Nemtsov, my longtime friend and colleague in the Russian opposition, was murdered in the middle of Moscow on Friday night. Four bullets in the back ended his life in sight of the Kremlin, where he once worked as Boris Yeltsin ’s deputy prime minister. Photos showed a cleaning crew scrubbing his blood off the pavement within hours of the murder, so it is not difficult to imagine the quality of the investigation to come.

Vladimir Putin actually started, and ended, the inquiry while Boris’s body was still warm by calling the murder a “provocation,” the term of art for suggesting that the Russian president’s enemies are murdering one another to bring shame upon the shameless. He then brazenly sent his condolences to Boris’s mother, who had often warned her fearless son that his actions could get him killed in Putin’s Russia. Boris was a passionate critic of Mr. Putin’s war in Ukraine and was finishing a report on the presence of Russian soldiers in the ravaged Donbas region, a matter that the Kremlin has spared no effort to cover up. But the question “Did Putin give the order?” rings as hollow today as when journalist Anna Politkovskaya was gunned down in 2006, the same year that Putin critic Alexander Litvinenko was poisoned in London—or when a Malaysia Airlines passenger jet was shot down over eastern Ukraine last year.

Certainly the arrogance of the assassins is a notable clue. They could have chosen many dark and out-of-the-way places along the same route Boris took but instead sent a message by selecting a prominent and heavily surveilled spot. Opposition leaders are always watched closely by Russia’s security services before public rallies—Boris had been planning a protest against the Ukraine war on Sunday—so how could these trained bloodhounds not notice that someone else was following him? Regardless of whether President Putin gave the order, there is no doubt that he is directly responsible for creating the conditions in which these outrages occur with such terrible frequency.

The early themes in Mr. Putin’s reign—restoring the national pride and structure that were lost with the fall of the Soviet Union—have been replaced with a toxic mix of nationalism, belligerence and hatred. By 2014 the increasingly depleted opposition movement, long treated with contempt and ridicule, had been rebranded in the Kremlin-dominated media as dangerous fifth columnists, or “national traitors,” in the vile language lifted directly from Nazi propaganda.

Mr. Putin openly shifted his support to the most repressive, reactionary and bloodthirsty elements in the regime. Among them are chief prosecutor Alexander Bastrykin, who last week declared that the Russian constitution was “standing in the way of protecting the state’s interests.” In this environment, blood becomes the coin of the realm, the way to show loyalty to the regime. This is what President Putin has wrought to keep his grip on power, a culture of death and fear that spans all 11 Russian time zones and is now being exported to eastern Ukraine.

Boris Nemtsov was a tireless fighter and one of the most skilled critics of the Putin government, a role that was by no means his only possible destiny. A successful mayor in Nizhny-Novgorod and a capable cabinet member and parliamentarian, he could have led a comfortable life in government as a token liberal voice of reform. But Boris was unqualified to work for the Putin regime. He had principles, you see, and could not bear to watch our country slide back into the totalitarian depths.

And so Boris launched his big body, big voice and big heart into the uphill battle to keep democracy alive in Russia. We worked together after he was kicked out of Parliament in 2004, and by 2007 we were close allies in the opposition movement. He was devoted to documenting the crimes and corruption of Mr. Putin and his cronies, hoping that they would one day face a justice that seemed further away all the time.

Boris and I began to quarrel after Mr. Putin returned as president in 2012. To me, the Putin return signaled the end of any realistic hopes for a peaceful political path to regime change. But Boris was always optimistic. He would tell me I was too rash, that “you have to live a long time to see change in Russia.” Now he will never see it.

We cannot know exactly what horror will come next, only that there will be another and another while President Putin remains in power. The only way his rule will end is if the Russian people and the elites understand that they have no future as long as he is there. Right now, no matter how they really feel about Mr. Putin and their lives, they see him as invincible and unmovable. They see him getting his way in Ukraine, taking territory and waging war. They see him talking tough and making deals with Angela Merkel and François Hollande. They see his enemies dead in the streets of Moscow.

Statements of condemnation and concern over the Nemtsov murder quickly poured forth from the same Western leaders who have done so much to appease the Kremlin in recent days, weeks and years. If these leaders truly wish to honor my fearless friend, they should declare their support for the many tens of thousands of marchers who turned Sunday’s protest rally into a funeral procession. Western leaders should declare in the strongest terms that Russia will be treated like the criminal rogue regime it is for as long as Mr. Putin is in power. Call off the sham negotiations. Sell weapons to Ukraine that will put an unbearable political price on Mr. Putin’s aggression. Tell Russian oligarchs, every one of them, that there is no place their money will be safe in the West as long as they serve the Putin regime.

The response so far hasn’t been encouraging. Given President Putin’s sordid record, calls from Western leaders for him to “administer justice” could almost be considered sarcastic. Western media inexplicably continue to air, unchallenged, statements by his cadre of propagandists. Many reports credulously cite Mr. Putin’s high approval rating at home, as if such a concept has any meaning in a police state. Meanwhile, the Russian media churn out preposterous and insulting conspiracy theories about the death of a man they had called an enemy of the state.

We may never know who killed Boris Nemtsov, but we do know that the sooner President Putin is gone, the better the chances are that the chaos and violence Boris feared can be avoided.

Mr. Kasparov is the chairman of the New York-based Human Rights Foundation. His book on Vladimir Putin, “Winter Is Coming,” will be published by Public Affairs in the fall.

New Transcontinental Flights, La Guardia Airport to San Francisco

Long-haul Flights From La Guardia

Flights that are longer than 1,500 miles are currently banned from New York's La Guardia Airport, however regulators are considering removing the ban, and the effect on ticket prices, air traffic, noise and operations. This restriction is decades old, going back to 1984. The Port Authority of New York and New Jersey, are looking into the perimeter rule, “to determine whether it remains in the best interest of the region’s air travelers.” The authority said any change would occur only after thorough analysis and consultation with all interested parties in a public and transparent manner.”

Journalist Andrew Tangle and Jack Nicas reported;

“The mix of flights at La Guardia would change materially,” said Mike Boyd, president of aviation-consulting firm Boyd Group International. “Why would you have a 50-seat jet going to Charlottesville when that slot can be used for a 150-seat jet going to Seattle?”

Discussions on lifting the rule began late last year and have accelerated recently, people familiar with the talks said. The authority plans to study how abolishing the rule would affect air traffic, ticket prices, noise and operations at the region’s airports, these people said. The study could be completed within a few months, and lifting the rule would require approval by the bistate authority’s board of 11 commissioners, these people said. The discussions come as the governors of New York and New Jersey recently backed a report that, in part, called for easing regulatory burdens at the region’s airports.

Delta Air Lines Inc. and American Airlines Group Inc. control 40% and 28%, respectively, of the departing seats at La Guardia. JetBlue Airways Corp. and United Continental Holdings Inc. have much smaller positions there and have instead invested heavily in John F. Kennedy International and Newark Liberty International airports, which could lose some value if travelers can fly nonstop to more destinations from La Guardia.

Officials at two airlines said Delta has been lobbying Port Authority officials to reconsider the perimeter rule. Delta declined to comment.

Rob Land, JetBlue’s senior vice president of government affairs, said officials should complete a long-awaited project to replace a key terminal building before embarking on a rule change that would pack more travelers into an already overcrowded airport.

“The deplorable conditions at La Guardia from a customer perspective as well as an airline perspective operationally are only getting worse by the day and we have yet to begin the yearslong ‘pardon our dust’ period that is the Central Terminal project,” Mr. Land said. “It would seem the last thing we want to do is add more crowds to La Guardia until we appropriately address capacity issues.”

La Guardia’s two main 7,000-foot runways could support aircraft that can reach some near European cities, such as London and Paris, and Latin American destinations like Mexico City and Bogotá, Colombia. But La Guardia lacks a federal border-clearance facility, which is needed to accept travelers from most international airports, and has little space to add one.

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Still, without a perimeter rule, airlines at La Guardia could serve a handful of new international destinations, including Dublin and Vancouver, because those airports can pre-clear U.S.-bound travelers under agreements with U.S. border officials. Airlines already serve Toronto, Montreal, Ottawa and Halifax from La Guardia.

Travelers, politicians and airline officials have criticized La Guardia, built in 1929, for being outdated. Vice President Joe Biden last year said it was out of a “Third World country.”

The next step in a project to replace La Guardia’s 50-year-old Central Terminal Building, known to travelers as Terminal B, has been delayed until at least April pending the outcome of a broader design competition for New York airports. Some industry officials said they worry that lifting the perimeter rule could further delay La Guardia’s overhaul—concerns that are shared by some at the Port Authority, a person familiar with the process said. “Lifting the perimeter rule will absolutely have some impact on the procurement,” the person said.

The perimeter rule has roots in the 1950s, when the Port Authority limited La Guardia flights to within 2,000 miles, according to court documents. The authority formalized the rule in 1984 but tightened the restriction to 1,500 miles, with the exception of Denver. The rule isn’t in effect on Saturdays, and some airlines have experimented with longer flights on that day. Delta currently flies to Aruba and back on Saturdays.

The idea was to limit air traffic at La Guardia to business travelers and steer vacationers taking longer-distance flights to farther-flung Newark Liberty and JFK airports.

An executive at one airline said officials implemented the perimeter rule partly because decades ago, La Guardia’s runways could only handle aircraft that could fly less than 1,500 miles or so. But 30 years later, smaller jets can fly much farther than they used to.

“Today’s aircraft performance is such that it’s a really an anachronistic design to divide markets between La Guardia and the long-haul New York airports,” said Bob Mann, a New York-based airline consultant.

Limiting carriers to a 1,500-mile radius from La Guardia has resulted in nonstop service for a few dozen smaller cities in the eastern U.S., including Roanoke, Va., Lexington, Ky., and Bangor, Maine. Airline officials and consultants said that because slot restrictions prohibit carriers from adding more net flights at La Guardia, airlines would almost certainly drop flights to smaller cities in exchange for new service to the West Coast. Airlines stand to earn far more by flying larger planes to bigger cities than on serving small cities with 50-seat jets.

“This will change [smaller cities’] access to New York,” said Mr. Boyd, the airline consultant. “But it’s good business—the highest and best use of an asset.”"

Draft Drone Rules Rule Out Long Distances

The technological advances of unmanned aerial vehicles (UAVs) have been remarkable over the last couple of years. Their increasing capabilities and affordability promise many opportunities for commercial applications, ranging from farming to logistics. Despite the immense potential, the Federal Aviation Administration (FAA) has long been quiet about the upcoming regulatory framework. Until now.

The FAA has just released proposed rules for commercial drones within the United States.

Although the rules are not as draconian as some people feared, commercial applications for UAVs are still facing limitations compared to other countries.

The FAA isn't requiring commercial drones to undergo a lengthy and costly certification process. UAVs under 55 lbs can be flown as long as the operators have passed a basic aeronautical test.

They must, however, be flown below 500 feet, only in daylight, and remain within view of their operators at all time. They also can not be flown over people, such as at concerts and sporting events.

This is a “good first step”, says the Association for Unmanned Vehicle Systems. It would easily allow, for example, a real estate agent to take aerial photographs of a house being put up for sale. It would also allow for farmers looking to survey crop conditions.

Not being allowed to fly over crowds might prevent television companies from filming sporting events with drones. Perhaps further certifications would allow such maneuvers in the future.

The requirement that the UAVs stay within line of sight is also a big limitation, preventing long-distance flights (inspecting forests and monitoring pipelines, for example). This would also rule out Amazon's plan of using drones to deliver goods ordered online.

Michael Huerta, head of the FAA, says that as drones develop the rules will continue to "evolve."

As the technology improves and operators build experience, perhaps the agency will eventually permit longer-range, out-of-sight flights.

In the meantime, the current proposals will undergo a lengthy period of public comment before being finalized- possibly in 2017.

Drone operations in other countries are already getting airborne with pilot projects. In China, Alibaba has launched a drone delivery service for tea orders. In Europe, the logistics firm DHL has begun delivering medicine and other urgent supplies to a small island off the coast of Germany.

To see some of these pilot programs in action, check out this video from the Wall Street Journal:

Biden 2016?

Although the next presidential election isn't until Nov. 2016, curiosity of who will throw their name in election, is on everyone's mind. Including my own. Last week, Vice President Joe Biden visited South Carolina to discuss infrastructure investment. The topic changed, of course, to will Joe Biden run for the presidency.

During a quick stop in Columbia, Dick Harpootlian, former Democratic Party chairman in South Carolina said to Biden, "You need to run." Biden's response, "We'll talk."

Colleen McCain Nelson of the Wall Street Journal wrote, "Mr. Biden has taken no overt steps toward building a national campaign machinery, and few people expect him to run. Nonetheless, Mr. Biden in recent weeks has fanned the will-he-or-won’t-he conversation by suggesting that he’s still considering a bid and by scheduling trips to three states that hold the earliest presidential nominating contests."

Biden remains noncommittal on the subject of putting in a bid for presidency.  Trips to Iowa, South Carolina and New Hampshire to promote the administration's agenda inevitability turned to private conversations about the next presidential campaign.

Mr. Biden has described the presidential race as “wide open,” and may very well wait till summer to make a decision.

Could Biden be waiting to see if Hillary Clinton will run?  Most believe that since Mrs. Clinton dominates the polls over her competitors that if by off chance she doesn't run, Biden will.

Colleen McCain Nelson of the Wall Street Journal wrote, "Beyond that public declaration, the vice president said little privately during his trips to Iowa and South Carolina that suggested he was ready to run. Democrats in those states, as well as in New Hampshire, say they’ve seen no evidence of organizing efforts by Biden emissaries, and many supporters say no one from the vice president’s circle has even hinted that local officials might want to hold off on committing to other candidates."

This summer promises an exciting time. Who will run, or not for the Democratic party's presidential nomination?

Dish Network CEO Exchange, Clayton for Ergen

Joe Clayton, the president and CEO of Douglas County-based satellite TV company Dish Network Corp., retires at the end of March, and will also leave the Dish's board of directors.  Dish Network, founder and chairman Charlie Ergen will be the returning CEO.

"Over the last four years, Joe's leadership has been instrumental to Dish as we have worked to engineer a fundamental transformation of our business," Ergen.

Wall Street Journal reporter, Shalini Ramachandran, wrote, "Mr. Ergen, the company’s mercurial, 61-year-old founder, stepped away from the CEO role nearly four years ago. As chairman he helped game out Dish’s major strategic moves, including investments to enter the wireless business and a recent plunge into streaming TV.

Now, as he assumes day-to-day control once again, Mr. Ergen faces the challenge of capitalizing on those bold bets by finding revenue growth that can counterbalance stagnation in Dish’s core pay-TV business. Dish reported Monday that it lost 79,000 subscribers last year, with 63,000 shed in the fourth quarter as it battled major TV programmers in carriage fee disputes.

By some measures, the U.S. wireless industry is already mature: The number of U.S. wireless subscriber connections, including cellphones and tablets, amounts to more than the entire U.S. population, according to CTIA, the wireless industry trade association.

But in an interview, Mr. Ergen said he views the industry as “relatively in its infancy” and sees a world of wireless-enabled devices beyond tablets and smartphones, from refrigerators to cars to smartwatches – that will “lead to tremendous growth.”"

Seizing the Day

As posted on Fix the Debt: We celebrated President’s Day on Monday, a time for reflecting on the power of presidents to lead the way and shape the debate. We need that kind of leadership now as important decisions regarding the federal budget are about to be made.

President Obama’s recent budget proposal provides some good examples to follow, but also has more to be desired in other areas.

On the positive side, the president should be lauded for paying for all new initiatives in the budget. Some proposals, like universal preschool, have offsets explicitly linked to them while others are not specifically paired with a pay-for, but savings are identified elsewhere that could cover the costs. Congress should follow this example of abiding by “pay-as-you-go” (PAYGO) principles as new policies are considered.

In addition, the budget includes some deficit reduction beyond the savings to be used to pay for new initiatives. However,the budget only saves about half of what the White House claims, roughly $930 billion. While the savings are significant, much more will be required. Contrary to what a White House spokesman said, the budget does not meet the targets set by Simpson-Bowles.

The budget also misses an opportunity to seriously address the longer-term fiscal challenges. It claims to stabilize the debt at about 74% of the economy, but that relies on some assumptions that may be optimistic. Even if the assumptions hold up, debt will remain well above the historical average of about 40% of GDP. Fix the Debt, and others, faulted the budget for failing to adequately address the drivers of the debt going forward and not drawing attention to the need to bring the debt down.

In a Wall Street Journal column, Grep Ip asks if it is time to start thinking about instituting more aggressive deficit reduction now that the economy is improving. The president should be leading the discussion instead of avoiding it.

Colorado small business leader and Fix the Debt citizen-activist Jeff Wasden shares the wisdom of some past presidents in the Colorado Statesman. He writes that “President Obama needs to devote part of his final years as POTUS to reducing the burden of debt on this and future generations.”

We need leadership from the top. This week we are highlighting examples of presidential leadership on fiscal issues on our Facebook page. Make sure youfollow us.

See the president’s budget in charts.

Check out highlights of the president’s budget.

Labor secretary to hold more talks in West Coast ports dispute

BY STEVE GORMAN of Reuters ____________________________________

(Reuters) - U.S. Labor Secretary Tom Perez planned to hold a second round of talks with shipping company executives and union leaders for 20,000 dockworkers on Wednesday, seeking to broker a deal to end months of labor turmoil clogging cargo traffic at 29 West Coast ports.

Perez was sent to San Francisco as an emissary of President Barack Obama, who has come under mounting pressure to intervene in a conflict that has reverberated through the trans-Pacific commercial supply chain and, by some estimates, could cost the U.S. economybillions of dollars.

Steadily worsening cargo congestion that the union and shippers blame on each other has slowed freight traffic since October at the ports, which handle nearly half of all U.S. maritime trade and more than 70 percent of the nation's imports from Asia.

More recently, the shipping companies have sharply curtailed operations at the terminals, limiting the loading and unloading of cargo vessels to daytime shifts at the five busiest ports and to non-holiday weekdays only throughout the system.

Daytime work has continued in the dockyards, rail yards and terminal gates. Some smaller ports remained open to nighttime vessel operations as well.

The union and shipping companies each accuse the other side of instigating the disruptions to gain leverage in contract negotiations that have dragged on for nine months, appearing to hit a roadblock in the last two weeks.

The bargaining agent for the shippers and terminal operators, the Pacific Maritime Association, has said talks hit a snag over a union demand for changes in the system of binding arbitration of contract disputes.

The International Longshore and Warehouse Union has insisted the two sides are near an accord.

Perez joined the talks for the first time on Tuesday, meeting separately with each party, then briefly with both sides together, sources familiar with the situation told Reuters.

"Secretary Perez made clear that the dispute has led to a very negative impact on the U.S. economy, and further delay risks tens of thousands of jobs and will cost American businesses hundreds of millions of dollars," Labor Department spokeswoman Xochitl Hinojosa said in a statement at day's end.

Perez urged the parties "to come to an immediate agreement to prevent further damage to our economy," she said.

More talks were scheduled for Wednesday.

The union and the PMA have declined public comment since agreeing last Friday to honor a news blackout requested by a federal mediator who joined the talks last month.

Effects of the port slowdowns have rippled through the U.S. economy, extending to agriculture, manufacturing, retail and transportation.

The last time contract talks led to a full shutdown of the West Coast ports was in 2002, when the companies imposed a lockout that was lifted 10 days later under a court order sought by President George W. Bush.

Immigration Roundtable Event

Join us today - Monday, January 26^th  - for two events with Ali Noorani, National Director of Immigration Forum

and

Michelle Warren, Regional Director of the Bibles, Badges, and Business Network.

10:00AM at the South Metro Denver Chamber of Commerce on University and Arapahoe.

2:00 PM at the Aurora Chamber of Commerce

You don’t even have to leave your desk to attend. ICOSA Media will provide a live stream presentation of our press conference at 1:30 on Monday afternoon. You can find the video streaming below:

Job Openings at Highest Level in 14 years as U.S. Economic Growth Forecasts Become Brighter

U.S. economic growth forecasts have been upgraded to an expected 3.2% by the World Bank.  The full "Global Economic Prospects" report is available here:  http://www.worldbank.org/content/dam/Worldbank/GEP/GEP2015a/pdfs/GEP15a_web_full.pdf

Employers are feeling confident about their future prospects and have advertised the most job openings in 14 years. Roughly 5 million positions were available at the end of November, according to the Jobs and Labor Turnover Survey released Tuesday by the Labor Department. That's a 2.9% increase from October and the highest level since January 2001.

SpaceX Successfully Supplies the Space Station

A much-needed shipment of groceries and other supplies, including belated Christmas presents, has finally arrived this morning at the International Space Station (ISS). SpaceX's supply ship pulled up at the ISS two days after its launch. Station commander Butch Wilmore used a robot arm to grab the capsule and its 5,000 pounds of cargo while they flew over the Mediterranean at an altitude of more than 260 miles.

The six astronauts aboard the station were getting a low on supplies because the previous supply ship — owned by Orbital Sciences Corporation — was destroyed in a launch explosion back in October.

Rocket science isn't easy, however, as SpaceX's Dragon itself was stalled nearly a month by technical issues. It was originally planned to arrive at the space station well before Christmas. Better late than never.

"We're excited to have it on board," Wilmore said. "We'll be digging in soon."

NASA is paying SpaceX and Orbital for shipments, though Orbital's rockets are grounded until next year because of the recent launch accident. SpaceX is working hard and picking up as much slack as it can to deliver the supplies the ISS needs. As the station is an international venture, Russia and Japan are also planing on sending up deliveries later this year.

In addition to the main resupply mission, SpaceX conducted an experiment in return-landing the 1st stage of the rocket safely aboard an autonomous ocean going vessel. SpaceX's team is still poring over data from Saturday's rocket-landing test.

SpaceX founder Elon Musk is optimistic that recovering and reusing rockets will lead to a dramatic reduction is the cost of spaceflight. He asks people to imagine how expensive air travel would be if you had to build a new airplane for every flight.

The "hypersonic fins" on the booster ran out of hydraulic fluid, however, right before touchdown, and the landing was too hard and broke into pieces.

Elon Musk was encouraged regardless and plans another rocket-landing test next month. He had gone into the experiment with an understanding that there was a 50 - 50 percent chance of success, according to a recent Reddit AMA.

U.S. & China Cooperating on Trade Issues (Mostly)

Cooperation on export controls tops a long list of recent outcomes achieved at the 25th U.S.-China Joint Commission on Commerce and Trade (JCCT). While encouraging overall, this and other reports also highlight areas in need of improvement.

“This dialogue comes at an important time for the two largest economies in the world who share an enormous stake in the global trade and investment system,” says U.S. Trade Representative Michael Froman.

Having recently taken place in Chicago, both sides are speaking highly of the outcomes of the JCCT, such as those on medical devices, pharmaceutical access and agricultural biotechnology. The newly released fact sheet (embedded below) also offers greater detail into the Chinese efforts to import deep-water oil & gas exploration equipment from the U.S.

While potentially under export controls, the U.S. side of the High Technology and Strategic Trade Working Group (HTWG) says it will “actively review” individual cases for civilian high-technology items, such as deep-water oil and gas exploration equipment, an issue which the Chinese side raised in the HTWG meeting. The U.S. side committed to provide “timely feedback upon receipt of necessary and sufficient information.”

Remaining disagreement often revolve around intellectual property. While the majority of IP issues pertain to U.S. concerns about China's intellectual property rights regime, China was concerned that the U.S. fairly take into account information it receives from China about its efforts.

U.S. trade officials, congressional researchers and industry stakeholders have described Chinese progress on IPR issues as incremental, invariably adding that much more needs to be done. The U.S. committed “to consider and pursue additional steps as appropriate to enhance the transparency, objectivity, and fairness” of the reports, pledging to “recognize the efforts made and results achieved by foreign governments and entities.”

Other Outcome Areas Include:

•  U.S. transport aircraft bilateral airworthiness expansion;
•  Chinese enterprises participation in U.S. public-private partnership projects;
•  competition policy;
•  visas;
•  cargo airlines co-terminalization;
•  data on trade in fish products;
•  trade related to illegal logging;
•  railway locomotive vehicle import certification;
•  government procurement;
•  access to the Chinese legal services market;
•  Chinese investment in U.S. legal services market;
•  cooperation in promotion of trade in services;
•  cooperation on climate change and clean energy;
•  criminal law enforcement cooperation on intellectual property;
•  food and drug safety inspections;
•  legal exchanges;
•  administrative law issues; and
•  engagement on judicial best practices.

Click here to see the full U.S. fact sheet

CRS Report

In related news, the Congressional Research Service Dec. 19 released a report on “China-U.S. Trade Issues” by Wayne Morrison, a specialist in Asian trade and finance.

The report updates previous reports to include the outcomes of the latest JCCT as reflected in a Dec. 19 Commerce Department fact sheet.

It highlights that China stated that it would approve the importation of new biotechnology varieties of U.S. soybeans and corn and improve trademark protection for certain agricultural products; amend its trade secrets law and increase cooperation with the U.S. on enhancing sales of legitimate U.S. intellectual property-intensive goods and services in China; streamline China's processes and cut red tape for imports of pharmaceuticals and medical devices; and make improvements to its competition enforcement policies by improving transparency and ensuring equal treatment for foreign firms in anti-monopoly investigations with Chinese firms.

USTR Report

Also just released is the U.S. Trade Representative's final report to congress on China's compliance with its World Trade Organization commitments.

The USTR finds several areas where China is lagging in its commitments: intellectual property rights (IPR) enforcement, supporting state-owned enterprises, homegrown innovation policies, technology transfer initiatives, export restraints, investment restrictions and agricultural policies blocking U.S. market access.

The USTR also found China to be inappropriately using antimonopoly and trade remedy laws. Additionally they say there remains transparency issues and “slow movement” toward accession to the WTO Government Procurement Agreement.

“Going forward,” the report said, “the United States looks to China to reduce market access barriers, uniformly follow the fundamental principles of non-discrimination and transparency, significantly reduce the level of government intervention in the economy, fully institutionalize market mechanisms, require state-owned enterprises to compete with other enterprises on fair and non-discriminatory terms, and fully embrace the rule of law.”

These steps are considered “critical to realizing the tremendous potential presented by China's WTO membership.”

U.S. Economic Growth Higher than Expected

U.S. Economy Grows with Exports and Spending

The world’s largest economy grew faster in the third quarter than initially estimated, making this the strongest six months in a decade. The Bureau of Economic Analysis is now reporting that third quarter GDP growth was actually 3.9 percent annualized --- up 40 basis points from the "advance" estimate published last month.

The BEA cites positive contributions from net exports (total exports less imports) as an important factor in the revision. Real exports of goods and services increased 4.9 percent in the third quarter while real imports of goods and services decreased 0.7 percent.

Consumer spending, accounting for nearly 70 percent of the economy, grew at a 2.2 percent annualized rate in the third quarter compared with the previous advance estimate of 1.8 percent. While the Conference Board's consumer confidence index fell to 88.7 this month from an October reading of 94.1, October 2014 was the strongest seen since October 2007.

The weekly Bloomberg Consumer Comfort Index rose to the highest level since December 2007 as Americans grew more upbeat about the state of the economy, their financial well-being and the buying climate.

“The data today really bode well for 2015,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who projected consumer spending would be revised up. “Businesses have a pretty good reading on consumer demand for their goods and services. They would not be ordering additional equipment if they did not think the consumer was going to be there down the road for them.”

---

BEA's national, international, regional, and industry estimates; the Survey of Current Business;

and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting

the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

*     *     *     *     *

Next release -- December 23, 2014 at 8:30 A.M. EST for:

Gross Domestic Product: Third Quarter 2014 (Third Estimate)

Corporate Profits: Third Quarter 2014 (Revised Estimate)