Tag Archives: regulation

Public Education under Trump

Originally published in The American Prospect winter 2017 issue.
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On November 8, 2016, the man who vowed to be “the nation’s biggest cheerleader for school choice” won the presidential contest. About two weeks later he announced that Betsy DeVos, a billionaire Republican donor who has aggressively lobbied for private-school vouchers, online education, and for-profit charter schools, would serve as his education secretary. In early December, Jeb Bush told an audience of more than 1,000 education reformers in Washington, D.C., that he hoped “there’s an earthquake” in the next few years with respect to education funding and policy. “Be big, be bold, or go home,” he urged the crowd.

To say education conservatives are ecstatic about their new political opportunities would be an understatement. With Republicans controlling the House and Senate, a politically savvy conservative ideologue leading the federal education department, a vice president who earned notoriety in his home state for expanding vouchers, charters, and battling teacher unions, not to mention a president-elect who initially asked creationist Jerry Falwell Jr. to head up his Department of Education, the stars have aligned for market-driven education advocates.

Donald Trump neither prioritized education on the campaign trail, nor unveiled detailed policy proposals, but the ideas he did put forth, in addition to his selection of Betsy DeVos, make clear where public education may be headed on his watch. And with a GOP Congress freed from a Democratic presidential veto, conservative lawmakers have already begun eyeing new legislation that just a few months ago seemed like political pipedreams.

Many aspects of education policy are handled at the state and local level, of course, but Republicans will govern in 33 states, and Trump will have substantial latitude to influence their agenda. The next few years may well bring about radical change to education.

School Choice

“President-elect Trump is going to be the best thing that ever happened for school choice and the charter school movement,” former New York Mayor Rudy Giuliani has proclaimed. “Donald is going to create incentives that promote and open more charter schools. It’s a priority.”

Giuliani’s comments reflect the enthusiasm that Trump expressed about choice and charters while campaigning for president. During a March primary debate, Trump said charters were “terrific” and affirmed they “work and they work very well.” A few months later he traveled to a low-performing for-profit charter school in Cleveland to say he’d invest $20 billion in federal money to expand charters and private-school vouchers as president. His campaign has not outlined where the money would come from, but suggests it will be accomplished by “reprioritizing existing federal dollars.”

Trump’s ambitions will likely be aided by his vice president-elect, Mike Pence, who worked vigorously to expand charter schools and vouchers while serving as Indiana’s governor. Pence loosened the eligibility requirements for students to obtain vouchers, and eliminated the cap on voucher recipients. Today, more than 30,000 Indiana students—including middle-class students—attend private and parochial schools with public funds, making it the largest single voucher program in the country. Pence also helped double the number of charter schools in his state; he increased their funding and gave charter operators access to low-interest state loans for facilities.

In the House and Senate, Republicans are eager to expand Washington, D.C.’s private-school voucher program, which has paid for about 6,500 students to attend mostly religious schools since the program launched in 2004. “I think [the Republican Congress and new administration] could eventually turn D.C. into an all-choice district like we see in New Orleans,” says Lindsey Burke, an education policy analyst at the right-leaning Heritage Foundation.

Congress also allocates $333 million per year to the federal charter school program, and groups like the National Alliance for Public Charter Schools are calling for that number to rise to $1 billion annually. Martin West, an education policy professor at Harvard’s Graduate School of Education, noted that to the extent the federal charter school program is well funded, states will continue to feel pressure to position themselves competitively for those dollars.

Conservative leaders at the state level are also looking to expand private-school vouchers and so-called education savings accounts, which are voucher-esque subsidies that can go toward expenses like tutoring and homeschooling, in addition to private-school tuition. At the Washington conference where Jeb Bush keynoted, panelists spoke enthusiastically about setting up vouchers or education savings accounts in all 50 states. On the campaign trail, Trump called for expanding private-school vouchers for low-income students, but his vice president-elect and his nominee for education secretary both support giving vouchers to middle-class families, too.

Congressional Republicans may also try to establish federal tax-savings accounts for K–12, which are similar to the 529 plans that already exist for higher education, and which mainly benefit well-off families. They also may push for federal tax credit scholarships, which would provide tax relief to individuals and businesses that help low-income children pay for private school.

In a sense, the George W. Bush and Barack Obama administrations softened the ground for a federally incentivized expansion of vouchers and other forms of privatization. In the bipartisan deal that led to the enactment of No Child Left Behind in 2002, Bush and Democrats led by Senator Edward Kennedy traded federal standards for more federal funding. The subtext was the Republican narrative that public schools were failing. This in turn led to the era of standardized testing and punitive measures against “failing” schools. Later, by appointing former Chicago Public Schools Superintendent Arne Duncan to lead the Education Department, and passing over such progressive reformers as Linda Darling-Hammond, Obama sided with those who sought measures like the nationalization of academic standards. The new backlash from conservatives against testing and the Common Core should not be interpreted as a rejection of a federal role. The right loves it when Washington intervenes—if it serves the right’s purposes.

The Department of Education

Trump has boasted that he would reduce the size of the federal government, and his DeVos-led Department of Education is one likely place he’ll start. Though threatening to dismantle that federal agency is a long-standing Republican tradition, surrogates say it is more likely that Trump will try and “starve” the department, and downsize its responsibilities, rather than kill it outright.

In October, Carl P. Paladino, a New York real-estate developer who was briefly considered for education secretary, took to the stage on Trump’s behalf at a national urban education conference and said the department’s Office for Civil Rights—which oversees initiatives like tackling college sexual assault and reforming school discipline—was spewing “absolute nonsense.”

Obama’s Education Department has given unprecedented attention to reducing racial disparities in school discipline, issuing the first set of national guidelines in 2014 and making clear that it would hold districts accountable for discriminatory practices. Policy experts think these efforts will fall quickly by the wayside in the coming years.

In a press conference following Trump’s victory, David Cleary, the chief of staff for Republican Senator Lamar Alexander, who chairs the Senate Committee on Health, Education, Labor and Pensions, said his boss believes the Office for Civil Rights should be reined in. “There will be aggressive oversight from Congress to make sure it shrinks back to its statutory authority and responsibilities,” Cleary said.

Another major threat to the Education Department is a significant loss of institutional knowledge. Politico reported that the agency is already experiencing a loss of morale since the election, and bracing for a serious brain drain: Many veteran employees who have served for decades, in addition to younger staff who entered government under Obama, are considering leaving because they don’t want to work for a President Trump.

Common Core

One crowd-pleasing element of candidate Trump’s stump speech was his promise to “kill” Common Core—the standards launched in 2009 that lay out what all K–12 students are expected to learn in English and math. The standards, which were created by a coalition of state governors, and incentivized by the Obama administration through the federal Race to the Top program, have been a flashpoint for conservatives, who see them as a threat to “local control.” Trump vowed to eliminate Common Core through the so-called School Choice and Education Opportunity Act—part of the legislative agenda he says he’ll focus on during his first 100 days. DeVos now stresses that she does not support Common Core, although an organization she founded—the Great Lakes Education Project, which she also funded and served as a board member for—strongly backed the standards in 2013.

While there are limits to what Trump and DeVos could do to end the Common Core standards (they are state standards, after all), Trump’s executive bully pulpit could certainly help embolden Common Core opponents on the local level.

Still, Catherine Brown, vice president of education policy at the Center for American Progress, is not so worried about the future of the national education standards. “I don’t even think Donald Trump knows what the Common Core is,” she says. And despite candidate Trump’s demagoguery, Brown points out that states haven’t really abandoned them, even in more conservative parts of the country. “To the extent that states have changed their standards, they basically renamed them and kept the basic content,” she says.

Teachers Unions

This past year, public-sector unions faced an existential threat from Friedrichs v. California Teachers Association, a Supreme Court case seeking to overturn a 40-year-old ruling that required public employees represented by a union to pay fees to cover the union’s bargaining and representation costs, even if they do not pay full membership dues. Five of the nine justices were clearly primed to rule against the so-called “agency fees” and upend decades of legal precedent, but Justice Antonin Scalia unexpectedly died in February, before the Court could rule. The case ended up in a 4–4 tie, leaving the law, and collective bargaining, in place.

Now that the Republican Senate has refused to hold a vote on Obama’s appointment of Judge Merrick Garland, Trump will nominate a conservative Scalia successor to the Court. With a number of Friedrichs look-alike cases headed to the Supreme Court, it’s a near certainty that a reconstituted majority of five conservative justices will strike down agency fees, which could considerably reduce the resources available to the American Federation of Teachers and the National Education Association—two of the nation’s largest unions. Were that not trouble enough, the massive support that the AFT and NEA gave to Hillary Clinton’s campaign is not likely to endear them to a president with a well-known penchant for revenge.

Every Student Succeeds Act

At the end of 2015, Congress passed the Every Student Succeeds Act (ESSA), the successor to the controversial Bush-era No Child Left Behind Act, which tied federal funding to school performance. The new law is set to take full effect during the 2017–2018 school year. While there was broad recognition that ESSA marked a positive step forward from the test-and-punish regime that had reigned for 13 years under No Child Left Behind, a diverse coalition of civil-rights groups has worried that its replacement, which substantially reduced the federal government’s role in public education, will not do enough to hold states accountable for the success of racial minorities, students with disabilities, and English language–learners. “The hard-learned lesson of the civil rights community over decades has shown that a strong federal role is crucial to protecting the interests of educationally underserved students,” wrote the Leadership Conference on Civil and Human Rights in a letter to Capitol Hill during the ESSA negotiations.

For the past year, the Obama administration worked to draft regulations that would help maintain some level of federal accountability for student learning and funding equity, particularly for disadvantaged students. These executive-level regulations, which have been controversial among congressional Republicans, are likely to be abandoned, or weakened, under President Trump.

One policy that congressional Republicans might push for under a President Trump is known as “Title I portability,” which would allow states to use federal dollars earmarked for low-income students to follow students to the public or private school of their choice. While still a candidate, Trump brought in Rob Goad, a senior adviser to Representative Luke Messer, an Indiana Republican, to help him flesh out some school-choice ideas. Messer co-sponsored a bill during the ESSA negotiations that would have launched Title I portability, but Obama threatened to veto any version of the law that contained it. A White House report issued in 2015 said that Title I portability would direct significant amounts of federal aid away from high-poverty districts toward low-poverty ones, impacting such districts as Chicago, Detroit, Los Angeles, and Philadelphia particularly hard. Conservatives may see a more politically viable route to push this policy under Trump.

Brown of the Center for American Progress doesn’t think Congress will likely pursue Title I portability, however, in part because it has a lot of other legislative priorities to attend to. “The ink is barely dry on ESSA; states haven’t yet submitted their plans. I think [portability] is probably dead on arrival, but maybe six years from now,” she says. Even then, Brown thinks the policy will never be all that popular, since huge swaths of the country lack many school options, making them poor candidates for private-school vouchers.

But other education experts say that the lack of brick-and-mortar schools in rural communities just means that the door could open more widely for for-profit virtual schools, which DeVos has strongly supported. In 2006, Richard DeVos, her husband, disclosed that he was an investor in K12 Inc., a national for-profit virtual charter school company that has since gone public. As of mid-December, Betsy DeVos had not clarified whether her family still holds a financial stake in the for-profit education sector.

Higher Education

Trump, who founded the now defunct for-profit college Trump University, recently agreed to pay $25 million to settle a series of lawsuits alleging fraud. Sara Goldrick-Rab, a sociologist at Temple University who studies college affordability, predicts America will be “open for business” under President Trump when it comes to promoting for-profit colleges. “This means cutting regulation and oversight, and defunding public higher education so that students view for-profits as a good deal,” she wrote on her blog following the election. The Higher Education Act, which governs the administration of federal student aid programs, is also up for reauthorization in 2017.

Trump didn’t devote much time while campaigning to talking about colleges and universities, but he did say in an October speech that he’d look to address college affordability by supporting income-based repayment plans, going against many Republicans who say such initiatives are fiscally reckless and create incentives to acquire too much higher education. Conservatives have also proposed rolling back Obama administration reforms that federalized all new student loans and applied stricter regulations, particularly to for-profit institutions. If President Trump does ultimately re-privatize student loans, consumer protections would likely disappear, and the cost of borrowing would rise.

University leaders are also worrying about what a Trump administration could mean for research funding. The government is likely to cut back on investments on budgetary grounds, but also on ideological grounds, since universities tend to be seen as liberal enclaves. Experts say that non-ideological scientific research is particularly vulnerable. House Republicans, led by Representative Lamar Smith, who chairs the House Science, Space and Technology Committee, have tried before to cut federal funding for social sciences and climate and energy research, and having a president who refers to global warming as a hoax “created by and for the Chinese” doesn’t augur well for federal research investments.

Moreover, as the president-elect frequently rails about political correctness, higher education leaders worry that a Trump administration will not look kindly on student free speech and protest. Ben Carson, who was briefly considered for Trump’s education secretary, said that if he were in control he would repurpose the department to monitor colleges and universities for “extreme bias” and deny federal funding to those judged to have it. Decrying alleged campus bias is a staple of “alt-right” (read: white nationalist) media outlets like Breitbart, whose chief, Steve Bannon, will be Trump’s strategic adviser and senior counselor.

The Path Forward for Progressives

For a week following the election, it wasn’t clear how exactly the liberal groups that backed Obama’s education reform agenda—Common Core standards, test-based accountability, and charter schools—would respond to their new choice-friendly president. The fact that the school reform agenda has long had bipartisan backing has always been one of its strongest political assets.

As pundits tried to guess whom Trump would pick for various cabinet-level positions, rumors started to float that Trump might be eyeing Michelle Rhee, the controversial former D.C. Public Schools chancellor, or Eva Moskowitz, the founder and CEO of Success Academy Charter Schools in New York City, for education secretary. Both women back the Common Core standards, and are broadly revered among Democratic school reformers.

But on November 17, just over a week after the election, the president of Democrats for Education Reform, Shavar Jeffries, issued a strongly worded statement urging Democrats to refuse to accept an appointment to be Trump’s secretary of education. “In so doing, that individual would become an agent for an agenda that both contradicts progressive values and threatens grave harm to our nation’s most vulnerable kids,” Jeffries said. He condemned Trump for his plans to eliminate accountability standards, to cut Title I funding, to reduce support for social services, and for giving “tacit and express endorsement” to racial, ethnic, religious, and gender stereotypes, and he called on the president-elect to disavow his past statements.

Shortly thereafter, Moskowitz announced that she would “not be entertaining any prospective opportunities” in the administration, but defended the president-elect, saying there are “many positive signs” that President Trump will be different than candidate Trump. His daughter, Ivanka Trump, took a tour of a Success Academy charter in Harlem later that week. Rhee, following a meeting with Trump a few days later, issued a statement saying she would not pursue a job in Trump’s administration but that “[w]ishing for his failure” would amount to “wanting the failure of our millions of American children who desperately need a better education.”

The equivocating didn’t end there. Democrats for Education Reform soon walked back their original declaration of opposition to Trump. In a statement sent to the group’s supporters, Jeffries wrote that DFER was not saying Democrats should not work with Trump on education, but just that no Democrat should work for him as secretary of education. “[W]e draw a distinction between working with and working for Trump,” Jeffries wrote. “Where appropriate, we will work with the Administration to pursue policies that expand opportunity for kids, and we will vocally oppose rhetoric or policies that undermine those opportunities.”

In a political climate where teachers-union strength may dramatically diminish, opposition to Trump’s agenda from liberals who supported Obama’s education reforms could be an important deterrent to Trump’s rightward march on education. But with DFER already signaling that it’s open to working with Trump, with high-profile reformers like Moskowitz and Rhee also giving him a public nod of approval, and since some of the same billionaires who fund the charter school movement also back the president-elect, the chances aren’t great that Democratic education reformers will staunchly oppose Trump’s school reform agenda.

Randi Weingarten, the president of the American Federation of Teachers, is under no illusions about the enormous challenges that loom for the future of public education. Yet she notes that over the past half-decade, educators and their unions have worked with their communities like never before. “If Donald Trump opts for privatization, destabilization, and austerity over supporting public education and the will of the people,” she says, “well, there will be a huge fight.”

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Recalled But Not Repaired: Why we have millions of cars with unfixed safety recalls — and Germany has none.

Originally published in the Fall 2014 issue of The American Prospect.
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On May 30, Angela Davidson, her husband Clarence, and their twelve-year-old daughter Kira drove a 2010 Dodge Ram down Highway 15 in California, when they heard a loud knock, followed by a popping sound. Seconds later, their truck came to a screeching halt. After seeing smoke rolling into the truck, Angela opened the door to jump out, though one of her legs was quickly burned. Clarence barely had time to get Kira out before the entire truck became engulfed in flames. The truck kept rolling backwards, causing a brush fire that burned more than three acres before the firefighters could put it out. Highway 15 was closed for almost four hours.

Eleven days earlier, the Davidsons had purchased the Dodge Ram from a CarMax dealer in Irvine; CarMax is the nation’s largest retailer of used cars and trucks. Angela says her family went to CarMax specifically because they advertise that all their vehicles are thoroughly examined, with expert technicians stamping a “Certified Quality Inspection” on each one.

When the Davidsons signed a contract on May 19 and drove their truck off the lot, they believed they had just purchased a safe vehicle for their family. A few days later, they contacted Dodge customer service with a question, and the representative informed them that, oh, by the way, there appears to be a July 2013 safety recall issued for the pinion in your truck’s rear axle, and it’s very important to get it fixed right away.

“When I found out it was under recall I was furious,” said Angela. “I just felt like, this is so wrong, why would you guys sell us a car with an open recall like that? I thought of course CarMax would apologize and take the truck back.”

But CarMax—both the Irvine dealer and corporate headquarters—refused to take responsibility and told the Davidsons that it was up to them to repair their truck. Although the Davidsons then took the car to a local Dodge dealer, which may hold some responsibility for the ultimate explosion, CarMax apparently sold the Davidsons an unsafe vehicle. “How did they know that we wouldn’t be killed the same day we bought it?” Angela wrote in a draft testimony of the experience. “The answer is, they didn’t know. They just left it up to chance that we would even find out about the safety recall.”

Stories about vehicles like the Davidsons’ take on added significance in light of this year’s General Motors scandal, in which the automaker finally recalled nearly 2.6 million cars for an ignition switch defect known to company officials for more than a decade and linked to at least 54 crashes and 13 deaths. But six months after the recall, Automotive News reported that roughly 1 million car owners had yet to contact a dealership to fix their flawed ignition switches, and GM was struggling to track down contact information for many of those people.

In the United States, about one in every six cars on the road, or 37 million vehicles, has an unfixed safety recall. These are not minor problems; in safety recalls, the manufacturer or the National Highway Traffic Safety Administration (NHTSA) has determined that a car or piece of motor vehicle equipment poses an unreasonable risk to safety or fails to meet minimum safety standards. When a recall is in effect, manufacturers are legally obligated to do the repairs for free. Consumers, however, are not required to fix their car, regardless of the defect’s severity. In 2011, the Government Accountability Office (GAO) found the annual recall compliance rate in the United States averages 65 percent.

The latest GM episode is not the first major auto recall crisis to prompt public concern about unrepaired safety hazards. In August 2000, Ford Motor Company and Bridgestone/Firestone jointly announced a recall of 6.5 million tires after they linked them to more than 200 deaths and at least 700 injuries. Six years after the recall announcement, however, experts estimated that more than 200,000 faulty tires had yet to be replaced. An investigative reporter in Georgia even found some of the recalled tires still for sale in 2013.

In direct response to the tire recall, Congress passed the Transportation Recall Enhancement Accountability and Documentation Act (TREAD). TREAD established a new early warning reporting system, which requires manufacturers and their suppliers to regularly submit information about possible safety issues to NHTSA. “The TREAD Act represents an important first step towards strengthening our nation’s motor vehicle laws,” President Bill Clinton declared when he signed the bill in 2000. “And its vigorous and quick implementation will help save lives and prevent injuries.”

But recalls haven’t fallen. In fact, the number hit a new record this past July, with the most vehicles—39.85 million—ever recalled in a single year. “The problem is only growing,” said Chris Basso, a spokesman for Carfax, a web-based service that tracks the history of every vehicle based on its Vehicle Identification Number (VIN). “We have a recall [compliance] rate that leaves 35 percent of cars unrepaired and that number is likely to go up.”

“I want every vehicle fixed, and I’ve been clear about that all along,” GM chief executive Mary Barra said on CNBC, adding, however, that “ultimately it’s the consumer who makes that choice.”

But why are the repairs on safety recalls optional? The risk, after all, is not just to the car owners but also to those who ride with them and others on the road. In light of the public safety hazard, some countries have decided that it makes little sense for consumers to choose whether or not to repair defects on recalled cars. Germany, for example, makes those repairs mandatory. The German Federal Motor Transport Authority enforces that rule by refusing to renew the vehicle registrations of owners who fail to fix their cars. In 2010, Germany revoked owners’ registration due to outstanding safety recalls more than one thousand times. Consequently, the German annual recall compliance rate is 100 percent. Moreover, although German manufacturers aren’t legally required to bear the cost of the repair as they are in the United States, they do so nearly 100 percent of the time.

This combination of full compliance by the customer and full cost paid by the manufacturer creates an economic incentive for German car companies to build better cars the first time around. “There is a popular saying in Germany: Quality is if the customer comes back—not the product,” said Stephan Immen, a spokesman for the German agency. “The one responsible for the product knows what it means and acts corresponding to that.”

The United States could follow Germany’s example and make car registration renewal contingent on auto recall completion. Such a policy would be easy to carry out because DMVs can check each car’s VIN at the time of registration. Some states are already doing this successfully for energy emission standards. In California, if a vehicle owner fails to respond to an energy emission recall notice or the car fails to meet the state standard, the owner’s registration renewal will be denied until the repair is complete. Organizations like the Center for Auto Safety favor applying this same concept to auto safety recalls.

While taking time out of one’s busy life to get a car repaired isn’t something people are excited to do, states typically give owners 30 to 60 days to get it done, and in these cases, the owners have to pay for the cost of the emissions repair themselves. In contrast, if a similar system were applied to auto safety recalls, the repairs would be done at the manufacturer’s expense. Of course, giving up one’s car, even for just a few hours, may cause frustration and anxiety—often to the point where not fixing the car feels like the more sensible option. But manufacturers already sometimes provide free rental or loaner vehicles to individuals while their car is being repaired. GM recently offered this option to consumers who need to fix their car’s defective ignition switch.

Some auto safety reformers hope that small policy changes—like using particularly urgent language in the mailed notice letters—will motivate more owners to fix their cars. “Some manufacturers send pablum [recall notices], so people don’t really think they’re that important,” said Joan Claybrook, a veteran auto safety advocate who headed NHTSA from 1977 to 1981. “NHTSA has the authority to review those letters before they go and make sure they say ‘Alert! Alert!’”

Others have tried to raise the recall compliance rate by hiking penalties for irresponsible manufacturers. One bill introduced in Congress would require key management officials to disclose serious dangers with their products or face a fine and up to five years in prison. Another would require manufacturers to submit accident reports to federal regulators, who would need to make those documents immediately available to the public. And a third would eliminate the cap on civil fines—now $35 million—that the Department of Transportation can levy on automakers for failing to report known defects.

The sponsors of these measures hope that a combination of harsher manufacturer penalties and heightened efforts to disseminate information to the public will lead, eventually, to safer roads. But they have shied away from the most direct approach: making registration renewal dependent on getting the safety defects repaired. The battle over two more limited measures—requiring recall repairs in used cars and rental cars—suggests where the political problems lie.

Rental cars present what might seem to be an easy case for auto recall reform. After all, the rental car companies should be concerned about protecting their reputation for quality and the value of their fleets. But until recently, rental car companies could and would lease cars that were subject to safety recalls. In 2004, sisters Raechel and Jacqueline Houck, 24 and 20 respectively, rented a Chrysler PT Cruiser from an Enterprise Rent-A-Car dealer. This model had been recalled a month earlier after experts realized that the steering hose could leak and cause a fire. But the women were unaware because rental companies aren’t legally required to disclose safety recall information to customers. Driving down Highway 101 in northern California, the Houck sisters’ rental car caught fire and hit an oncoming semi-tractor trailer; they died instantly. After the accident, Enterprise tried to settle the scandal quietly, with a $3 million offer in exchange for the family’s confidentiality. The Houcks rejected the proposal and have been leading consumer safety efforts since.

Rental companies at first adamantly opposed changing their lenient recall policies, but activists and legislators continued to apply pressure. As a result, the four largest companies—accounting for 93 percent of the rental car market—now pledge not to rent vehicles that are subject to a safety recall.

But consumer groups insist that without a law requiring recall repairs, individuals are forced to just trust rental companies to abide by their public commitments. Thus reformers are fighting for the passage of a Senate bill, the Raechel and Jacqueline Houck Safe Rental Car Act, which would bar rental car companies from renting recalled vehicles to consumers. Even the American Car Rental Association, the policy voice representing the rental car industry, now supports the legislation.

But some powerful groups have worked hard to prevent the bill from becoming law. The Alliance of Automobile Manufacturers, the auto industry’s trade association, has refused to support the bill on the grounds that “it would give rise to a myriad of anti–consumer impacts” like increased rental costs for consumers. The real reason, though, is a concern that such a law would expose them to lawsuits.

“If Avis or Hertz has to take a car out of service for a week to get it fixed, particularly if it’s subject to a recall and the repair is not available, the rental companies may be looking at a car being out of service for three months,” said Clarence Ditlow, executive director of the Center for Auto Safety. “The auto companies are fearful that if this bill goes through they will be sued by the rental companies for the loss of use.”

The powerful National Automobile Dealers Association (NADA), representing sixteen thousand new car and truck dealerships with about thirty-two thousand domestic and international franchises, also opposes requiring rental companies to get defective cars fixed, arguing that the bill fails to differentiate one recall from another. (NHTSA does not distinguish recalls.) NADA says rental companies should only agree not to lease or sell defective vehicles if manufacturers issue “Do Not Drive” letters for recalls they deem to be the most serious. Rosemary Shahan, executive director of Consumers for Auto Reliability and Safety (CARS), says this is a cheap rhetorical trick because it is “extremely rare” for a manufacturer to voluntarily issue “Do Not Drive” letters—getting a company to issue a recall notice is hard enough as it is.

NADA’s political power also helps explain why Congress hasn’t passed a used car safety bill—a version of the Safe Rental Car Act, but for used cars. In California, a bill—S.B. 686—was introduced in 2013 that would have prohibited auto dealers from selling recalled used vehicles to consumers. Statewide polling revealed that 88 percent of Californians backed this policy. Angela Davidson testified about her CarMax experience at an S.B. 686 hearing in June. But the California New Car Dealers Association, CarMax, and others managed to kill the bill. Activists are now considering a 2016 California ballot initiative, but gathering enough signatures to qualify could cost nearly $1.5 million.

NADA insists publicly that increasing financial penalties for manufacturers who delay recall notices, rather than barring dealers from selling unsafe vehicles, would “better result in consumer safety.” But dealers, like manufacturers, are no doubt worried that new legislation would hurt their ability to sell cars, and consequently cut into their profit margin.

The recall problem is compounded by the growing shortage of qualified mechanics and technicians able to diagnose issues and make the necessary repairs. According to the Auto Care Association, demand for auto technicians has outstripped supply since 2010, and the nation is short about ninety thousand mechanics given what is needed. One of the reasons Germany has done so well in retaining its manufacturing base is its investment in vocational educational programs. Germany’s ability to produce high-quality cars—and to fix them when problems arise—is undoubtedly linked to its strong commitment to train people to build, maintain, and repair them.

Withholding car registrations makes the most sense as a way to raise compliance with safety recalls, but other alternatives have also surfaced to fix the unfixed-vehicle problem.

Shahan says, “First, we’ve got to focus on things that don’t penalize the consumer who didn’t make the defective product.” CARS supports legislation requiring DMVs to issue recall warnings when vehicle registration notices get sent in the mail. Car insurance companies could also help by sending reminder notices to customers when they see evidence of an outstanding safety recall. “What we’ve found is that the reason a lot of the unfinished recalls are not done is because the consumer doesn’t know about it,” said Ditlow. Research shows that newer cars are repaired in higher numbers than older cars, so the sooner a recall is announced and the sooner the owner learns about it, the greater chance there is that it will actually be repaired.

This past February, NHTSA announced that it would institute a new mandatory label to help owners clearly identify recall mailings. But relying on the mail is proving increasingly difficult, as owners change addresses or hand off their cars, and the DMV often lacks reliable, updated records.

In light of these challenges, NHTSA and manufacturers are exploring new ways to reach vehicle owners through such means as text messaging, mobile apps, and emails. But some auto safety advocates worry about the growing digital divide. “Not everyone has access [to the Internet],” said Shahan, who also says that government agencies need to do more to reach people who speak languages other than English.

Despite the political hurdles, momentum is building for more substantial auto recall reform. In April, the Obama administration recommended that Congress ban the sale and rental of unfixed recalled vehicles. Then this summer, New York City became the first city to prohibit the sale of recalled used cars. Jay Rockefeller, the outgoing chairman of the Senate Commerce Committee, also recently introduced legislation that would give NHTSA new authority to order unsafe vehicles off the road, rather than merely suggesting they get repaired. His bill, the Motor Vehicle Safety Act of 2014, would also bar the sale of unrepaired used cars.

In the public policy world, there are a lot of intractable problems for legislators, activists, and reformers to tackle. Unfixed auto safety recalls are not one of them. This is a problem we can solve. It is not a fantasy to imagine a decent system that helps vehicle owners expediently take care of their safety problem with as little inconvenience as possible, so millions of unsafe cars are no longer on the road. It may take several steps; perhaps dealing with rental cars first, then used cars, and then all cars. But eventually, we could see an improvement in public safety and perhaps even higher-quality automotive manufacturing.

Auto safety reform has produced some of the most important public health advances in the last half-century; the advent of seatbelts, airbags, and drunk-driving legislation has saved hundreds of thousands of lives. Each time the government took steps to tighten safety regulation, the auto industry argued that the proposed changes were too costly, unfair, or futile. But the changes have been accepted, and hardly anyone wants to go back. The poll showing 88 percent of Californians favoring the Safe Rental Car Act ought to encourage politicians to tap into the public support for reform. As Shahan says, “These days, there isn’t much that polls at 88 percent.”

How Can Obama Fix Overtime Pay?

Originally published in The JHU Politik on April 13th, 2014.

The Obama administration recently announced plans to revise overtime pay regulations under the Fair Labor Standards Act (FLSA). Under the law, employees who work more than 40 hours per week are entitled to time-and-a-half in overtime pay, but many categories of employees—notably “executive” and “administrative”—are exempt under FLSA. Unfortunately, within the last decade many employers have found ways to misclassify their workers as executives, managers and administrators in order to avoid paying them overtime. Now the Department of Labor wants to update the regulations by both tightening the duties that employees would have to perform in order to be recognized as managers and by raising the minimum salary threshold above $455 per week.

The Obama administration isn’t the first to amend the 1938 regulations. Back in 2004, Bush administration officials raised the minimum weekly salary threshold from $250 to $455 (or yearly salaries of slightly under $24,000 per year). They also relaxed the description of duties, effectively weakening the exemption standards for managers. This meant that fewer workers were now entitled to overtime pay than before. (Some economists argued that this regulation effectively barred more than six million workers from receiving overtime.)

At an International Association of Fire Fighters legislative conference in March, U.S. Labor Secretary Tom Perez said in a speech, “As a result of a loophole that was written into the regulation in 2004 by the Bush administration, quite literally somebody can work 1 percent of their time on management issues, 99 percent stacking the shelves and doing other work that has nothing to do with management, and you’re considered a manager, and you are no longer entitled to overtime.”

The original law purports to prevent employers from misclassifying their workers as managers. Indeed, regulation 29 CFR 541.2 states, “A job title alone is insufficient to establish the exempt status of an employee. The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee’s salary and duties meet the requirements of the regulations.”

However, there remain enough ambiguities that employers have found ways to still misclassify their workers and avoid paying overtime. Notably, one regulation codified in 2004 states that the law will henceforth recognize employers working “concurrent duties” of “exempt and non-exempt work” on a “case-by-case basis”—meaning that one could still be considered a manager or executive even if they are not doing managerial or executive work.

The White House is also talking about raising the minimum salary threshold. According to Betsey Stevenson, a member of the White House Council of Economic Advisers, there are 3.1 million people who would have been automatically covered by overtime provisions had the threshold kept up with inflation. 

Since 2004, the Consumer Price Index has increased by about 23.3%. So had the minimum salary threshold kept up with inflation, it would now be around $560 per week. All things considered, that’s still pretty low. The Washington Post reported that officials are considering raising the threshold to somewhere between $550 and $970 a week, or $28,600 and $50,440 a year.

The key point to understand is that just doing one of these measures is not enough to eliminate the perverse incentives in FLSA. Raising the salary threshold without tightening the duties test to be considered a manager might raise the salary of some workers but it would still allow employers to misclassify their employees as managers, and thereby skirt overtime pay.

There are also macroeconomic arguments for fixing the regulation. “By discouraging the use of overtime, we will be encouraging companies to hire more workers. This is simple logic,” wrote co-director of the Center for Economic and Policy Research, Dean Baker in an email. “If a company needs extra labor, but now has to pay a premium for working people overtime, it is more likely to fill this demand by hiring new workers. This is what we want.”

While the process of revising FLSA could extend until 2015, the administration’s initiative is good news. If the Department of Labor does this revision right, then employers will have to either pay more workers overtime, or hire additional employees. Both are desirable outcomes.     

Light Touch

Published in the March/April/May issue of The Washington Monthly magazine.
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If you’ve flipped on Fox News in the last few years, there’s a pretty good chance you’ve seen a bunch of talking heads denouncing the federal government for taking away their light bulbs.

“The government is forcing me—taking my right to choose away from me,” protested business anchor Stuart Varney about the phasing out of traditional incandescent bulbs in favor of more energy-efficient varieties. Economist Ben Stein dubbed the government’s action “raw, Bolshevik, Orwellian,” while political commentator Fred Barnes promised “to hoard hundreds of the old-fashioned light bulbs.” Other Fox voices complained about the “ugly” light quality of compact fluorescent bulbs, an alternative to incandescents, as well as their high cost and the fact that they contain mercury, a hazardous substance. “Your president is making me get rid of my incandescent light bulb,” grumbled security consultant and Fox contributor Bo Dietl. “I gotta use those toxic-waste light bulbs; if they fall you need a friggin’ hazmat suit to get at ’em!”

Spurring this agitation was the Energy Independence and Security Act of 2007 (passed, by the way, with substantial GOP support and signed into law by George W. Bush). Among other things, the EISA established energy-efficiency light bulb standards that would go into effect in stages beginning in 2012. The regulations required that manufacturers produce light bulbs that are at least 25 percent more energy efficient than traditional incandescents, a standard that Thomas Edison’s 135-year-old technology simply could not meet. Retailers would still be able to sell the incandescent light bulbs they had in stock, but eventually most consumers would be left to sift through alternative options.

The conservative attacks caught on not just with Fox viewers but with millions of nonpartisan Americans. Why? Because the primary alternative consumers initially had, compact fluorescents, really were awful. The pigtail-shaped contraptions cost three to ten times more than an equivalent incandescent bulb, emit a weird harsh glow, and break easily, not only releasing their small amounts of toxic materials but also undercutting the lasts-longer-than-traditional-bulbs arithmetic behind claims that they were an economic benefit to consumers. Even many latte-sipping urbanites reacted in horror. “I would, in a way, pay anything to avoid fluorescent,” artist Laura Stein told the New York Times. “I can’t stand them—I’ve always hated them and I will not use them.”

Yet the frustration of shoppers and the whining on Fox News has died down considerably in recent months. The reason is a new kind of household bulb that started hitting store shelves en masse late last year. These are bulbs made up of light-emitting diodes, or LEDs—the ubiquitous little indicator lights you see on computers and other electronic devices. The new household LED bulbs are essentially comprised of hundreds of little LEDs of different colors that together emit a white light that is softer and more pleasant than that of compact fluorescents. They cost about the same as the latter, but their prices are falling fast. They last about twenty-five times longer than incandescents and three times longer than compact fluorescents—up to 25,000 hours of light per bulb. They don’t break easily or come with aggravating health concerns. Best of all, they are up to 80 percent more efficient than traditional incandescents, which means significantly cheaper energy bills for consumers.

The coming (and staying) of LED bulbs is a case study in how government policy, rightly done, can spur private-sector innovation. While small LEDs were being sold for use in electronics as far back as the early 1960s, the technology to deploy them in household light bulbs was still fairly far off when Congress passed the EISA in 2007. In 2009 the New York Times reported on LED bulbs that exceeded $100 a piece and suffered from “performance problems,” adding that they “may not displace incumbent technologies” anytime soon. But the new market for energy-efficient bulbs that was scheduled to open up in 2012—and even earlier in Europe, thanks to European Union regulations similar to the EISA—gave lighting manufacturers an enormous incentive to step up development. The EISA also contained another inducement: a $10 million cash prize to the company that could develop the best high-quality alternative to the 60-watt incandescent. Philips won the competition in 2011 for an LED product that amounted to an 83 percent energy savings. But the bulbs weren’t cheap: when they first hit the U.S. market, they cost $50 a piece.

Meanwhile, conservatives began to rally hard against the forthcoming light bulb standards. Redstate.com editor Erik Erickson launched the attack in late 2010 with an open letter to the GOP congressional leaders who were about to take control of the House: “If you do only one thing in your time in Washington, and frankly I hope you do only one thing given your propensity to expand government … it is this: SAVE THE LIGHT BULB.” In January 2011, Texas Republican Representative Joe Barton introduced the Better Use of Light Bulbs Act, a bill designed to repeal the energy-efficiency light bulb standards. Michele Bachmann soon followed suit with her Light Bulb Freedom of Choice Act. “Thomas Edison did a pretty patriotic thing for this country by inventing the light bulb. If you want to buy Thomas Edison’s wonderful invention, you should be able to!” Bachmann told a group of supporters in 2011. “The government has no business telling an individual what kind of light bulb to buy.”

When January 1, 2012, rolled around, lighting companies, thanks to the EISA, stopped making new 100-watt incandescents. With compact fluorescents the only real alternative on the market at the time, the mainstream press had a field day, highlighting miserable and indignant shoppers furious with the law and the federal government—a story that perfectly fit the Tea Party backlash narrative of the moment. Even Mitt Romney, despite having supported energy-efficient light bulbs as governor of Massachusetts, hopped onto the bandwagon. In front of a Chicago crowd in 2012, Romney declared, “And the government would have banned Thomas Edison’s light bulb. Oh yeah, Obama’s regulators actually did just that.”

On January 1, 2014, the new EISA-mandated standards for 40- and 60-watt bulbs—which comprise 80 percent of the residential lighting market—were to kick in. That too might have been a boon to conservatives, had prices for LEDs remained high. Indeed, the U.S. Department of Energy had predicted in 2011 that 60-watt LED bulbs wouldn’t fall to $10 until 2015. But to almost everyone’s surprise, the industry hit that target two years early. By the end of 2013, you could head into Home Depot or Walmart and purchase LED bulbs for under $10. Their cost plummeted more than 85 percent between 2008 and in 2012 alone, and experts anticipate that prices will continue to fall steadily as retailers compete to be the leading LED bulb provider.

This is good news for the environment. The Department of Energy predicts that the widespread use of LED bulbs could save annual energy output equivalent to that of forty-four large power plants by 2027.

It’s also good news for the economy. The LED lighting market is anticipated to expand by 45 percent per year through 2019. The regulations shook a moribund industry that had yielded few, if any, new technologies in more than 100 years to finally invest in R&D and compete for new innovative products with a higher margin. Indeed, even as Americans start swapping out their incandescent bulbs with $10 LEDs, a whole new line of higher-end LEDs is hitting the market. These have chips built in that connect them to the internet, enabling you to brighten or dim them, or even change their color and hue, with your smartphone.

The only people for whom all this is not good news are conservative ideologues, who have suddenly seen one of their handiest examples of overbearing government turn on them. Of course, there are endless examples of government spurring private-sector innovation. Think semiconductors, the Internet, and the GPS industry. LED bulbs are a case of government getting it exactly right: writing a law and regulations that didn’t favor specific companies or technologies but set standards for performance that the private sector had to meet, with a bit of federal money thrown in to accelerate the process. Still, the idea that regulation and innovation can and often do go hand in hand is one conservatives struggle to get their heads around.

The War on Bulbs is no longer as widespread on Fox, but there are still some dead-enders. In January of 2014, Tim Carney wrote in the Washington Examiner that the federal government is still going to try to push compact fluorescents down everyone’s throat and that LED bulbs will never be cheap enough for people to afford for their homes. (He failed to mention, of course, the staggering drops in LED pricing that have already taken place.) That same month, Republicans managed to cram into a $1.1 trillion spending bill a provision barring the Department of Energy from spending money to enforce the new light bulb standards, though with the LED market having already taken off this is likely to have little effect. And just to be safe, South Carolina Republican Representative Jeff Duncan introduced the Thomas Edison BULB Act, which would repeal the light bulb efficiency standards altogether—thereby positioning the GOP as Luddite defenders of nineteenth-century technology. Fortunately the bill, like the larger conservative war on light bulb standards, doesn’t have much juice behind it.