Best and Worst Governors on Economy, COVID Response: Report

WASHINGTON—The governors of Texas, Georgia, and South Dakota rank highest in the nation based on economic policy performance and management of the COVID-19 health crisis, according to a new study. A scorecard by the American Legislative Exchange Council (ALEC), a conservative, nonprofit organization evaluated the 50 governors using various performance indicators, including tax and spending policy, use of federal funding from the CARES Act, education spending, welfare policy, and labor regulations. Texas Gov. Greg Abbott topped the list “due to his commitment to fiscal conservatism and free market policies,” the report by ALEC stated. Governors Brian Kemp of Georgia and Kristi Noem of South Dakota ranked second and third, respectively. All three are Republican. To judge overall performance, the governors were assigned a grade of 1 to 5 stars, with top performers getting 4 or 5 stars and the worst receiving 1 or 2. The worst governors on the scorecard were Gina Raimondo of Rhode Island, Mike Dunleavy of Alaska, and Phil Murphy of New Jersey. Raimondo and Murphy are Democrats, while Dunleavy is Republican. Besides an overall ranking, the study also ranked governors based on their state’s debt and spending levels, pandemic preparedness, and overall economic performance. “We analyze things from a free market basis,” Jonathan Williams, ALEC’s chief economist and co-author of the scorecard, told the Epoch Times. Governors who are “more responsive to taxpayers, keep spending and taxing at competitive levels, and keep their economies healthy are going to be better ranked according to our analysis,” he said. The study gives “legislators and taxpayers across the country a snapshot of how well their governor is fulfilling their duty,” Williams added. Other authors of the study are Reagan economist Arthur Laffer, budget and tax policy expert Donna Arduin, and economist Stephen Moore. Source: ALEC Democratic governors Andrew Cuomo of New York and Gavin Newsom of California both received 2 stars from the economists, ranking 39 and 40, respectively. While New York City is a global center of commerce and finance, the state’s aggregate economy performs the third-worst of any state, according to the report. “The situation in upstate New York is so dire, GDP and employment growth figures for the entire state are negative despite New York City’s wealth,” and this is because of “big government policies,” the report said. The only Democrat who made it to the top 10 was Colorado’s Gov. Jared Polis. Since taking office in 2019, Polis has embraced pro-growth policies. The state has experienced strong growth in recent years and Polis’ commitment to reducing the state’s personal income tax would support the growth further, according to the report. Williams argued that the study was based on objective, nonpartisan metrics. “We analyze things in a nonpartisan but free market way when it comes to policy. And the results speak for themselves with Republicans and Democrats being mixed in at the top and bottom of the rankings,” he said. Moore, the co-author of the report said good governors often make good presidents because of their experiences. “One of the reasons this governor’s report is important is, governors are oftentimes the next in line to be president,” he said in an interview with ALEC. “You’re going to see a lot of these people, like Polis, a Democrat, who probably has his eyes on the White House. And he’s been very good. And then you’ve got people like [Florida Gov. Ron] DeSantis. He has done a fantastic job. I hear a lot of people talking about Kristi Noem, kind of a superstar in the making,” he said. The third-best governor Noem made headlines this year for her refusal to shut down South Dakota’s economy. She rose to the occasion because of her “practice of fiscal discipline, her commitment to independent decision-making, and skepticism of a federal bailout,” the report stated. Other notable governors who protected their economies from unemployment surges due to the pandemic include Pete Ricketts of Nebraska, Kevin Stitt of Oklahoma, Gary Herbert of Utah, and Mark Gordon of Wyoming. All are Republican. In stark contrast, governors who failed to protect their economies include Newsom, Murphy, Cuomo, Charlie Baker of Massachusetts, and Tom Wolf of Pennsylvania. All but Baker are Democrats. The report also questioned the efficacy of mandatory business closures and stay-at-home orders. “A clear trend emerging throughout this ordeal is that regions with relatively strict and prolonged lockdown orders saw insignificant changes in the rate of deaths in their state or country,” the report said. “In several states, such as New York and New Jersey, death rates with respect to population were well above average despite strict lockdown policies.”

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On Recovery, Trump Says ‘V,’ While Biden Says ‘K’

WASHINGTON—Investors and economists have been debating the shape of the post-lockdown economic recovery in the United States for months, and they’ve labeled their forecasts for a rebound with letters such as V, W, or U. President Donald Trump and his advisers have repeatedly touted a “V-shaped” recovery, as the economic data over the past five months showed an exceptional rebound, with some data points already surpassing pre-pandemic levels. Democratic presidential nominee Joe Biden, however, disagrees with Trump, describing the recovery as “K-shaped,” with the rich getting richer and the poor getting poorer. “[Trump] talks about a V-shaped recovery. It’s a K-shaped recovery. If you’re on the top, you’re going to do very well,” Biden said at the ABC News town hall on Oct. 15. “If you’re in the middle or the bottom, your income is coming down. You’re not getting a raise.” Biden’s comments echoed what some economists have been warning about, the pandemic’s unequal toll on businesses and society. Because of large gaps in the performance of different sectors of the economy, some businesses are doing well while others continue to struggle. And this uneven recovery also is evident in the U.S. labor market. Some analysts, however, believe that this “alphabet soup” of economic forecasting has become more of a partisan issue. “The reality is every recovery is K-shaped,” Ed Yardeni, a veteran Wall Street strategist and president of Yardeni Research, told The Epoch Times. The recession caused by the pandemic would leave many people and businesses behind, he said. “That happens with every recovery. Not everybody returns back to normal at the same pace, and some may never return back to normal,” Yardeni said. “The K is really more of a partisan issue, because if we have a K recovery, then obviously we need more government to fix that problem. So, I think K is really more driven by politics than macroeconomics.” The rebound from the lockdown recession in the U.S. economy over the past five months has been stronger than most economists predicted. And the recent economic data continue to suggest a strong recovery. Retail sales, a measure of purchases at stores, restaurants, and online continued to rise in September, the fifth straight month of growth, driven by strong sales in housing-related goods, autos, and clothing. The housing market has also been a bright spot for the economic recovery, supported by record-low interest rates and increased demand for the suburbs. According to the new data released on Oct. 19, homebuilder sentiment set a record high for the second month in a row in October. Closely followed surveys of consumer sentiment and small-business optimism climbed to their highest levels since the pandemic broke out. “Investors tend to focus on the broad economy, and they tend to focus on revenues and earnings of companies. And we’re definitely seeing a V-shaped recovery in the S&P 500 revenues and earnings,” Yardeni said. Despite disappointing jobless claims and labor market recovery in recent weeks, the unemployment rate also dropped to 7.9 percent in September from a peak of 14.7 percent in April. Effects of a K-shaped Recovery While some industries are hiring back workers quickly, it’s clear that job losses are heavily concentrated in service industries, according to a new report by the U.S. Chamber of Commerce. The latest job market data showed the unequal impacts of a K-shaped recovery, with goods-producing industries at the top of the K, while services are the bottom, the report stated. More than 82 percent of the jobs lost since the beginning of the pandemic are service jobs, and leisure and hospitality account for nearly 36 percent of the losses. Every recession or every recovery is K-shaped, which has winners and losers, according to Nick Reece, senior analyst at Merk Investments. “It’s just the reality of the world that we live in that some of these areas of the economy are not allowed to reopen. Therefore they don’t even have the possibility of having a V-shaped recovery,” he told The Epoch Times. In some states such as New York, for example, restaurants are allowed to reopen with indoor dining at 25 percent capacity, he noted. With these government-mandated lockdowns, “there’s no option for these restaurants to have a 100 percent recovery,” he said, adding that the fiscal support should mainly target those sectors in the lower half of the K. Large gaps in the performance of different sectors of the economy are also evident in the stock market. Since the March 23 market low, the technology sector rallied above previous all-time highs, while airlines, energy, and hospitality businesses significantly lagged. “This has created enormous inequality not just in the performance of economic segments, but in society more broadly,” JPMorgan strategist Marko Kolanovic wrote in a report dated Aug. 31. “On one side, tech fortunes reached all-time highs, while lower-income, blue-collar workers and those that cannot work remotely suffered the most.”

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Expert: China Poses Greatest Threat to US Leadership in Emerging Technologies

WASHINGTON–The White House on Oct. 15 rolled out a new strategy to protect U.S. leadership in emerging technologies that are critical to economic and national security. The United States is the global leader in critical and emerging technologies such as artificial intelligence and quantum, but China’s exceptional growth in this space poses the biggest challenge to America’s leading position. The Chinese regime has dedicated large amounts of human and capital resources to become a global leader in this space, and China’s growth in science and technology raises concerns about its impact on the U.S. economy and workforce in the long-term. It also has implications for U.S. national security. In the strategy report, the White House identifies 20 technology areas as critical to U.S. national security, including artificial intelligence (AI), energy, quantum information science, communications and networking technologies, semiconductors, and space technologies. While the report recognizes both China and Russia as strategic competitors, the biggest challenge to maintaining American leadership in the science and technology field “definitely comes from China,” according to Rob Atkinson, president of the Information Technology and Innovation Foundation (ITIF), a U.S. think tank. “That’s really what the administration is getting at when they’re talking about external challenges to American innovation leadership,” he told the NTD Business show. Since joining the World Trade Organization in 2001, China has embarked on unfair trade practices, which include funneling hundreds of billions of dollars in government subsidies to support its key industries. China also has resorted to various tactics such as industrial espionage, cyber theft, forced joint ventures in exchange for market access, and acquisition of foreign companies to attain sensitive technologies. Atkinson said that there has been an increased recognition in the United States that the government needs to play an important role in protecting American innovation. “I think in one way this [White House] plan is very telling, because in the Republican Party, even five years ago, they wouldn’t be talking about competitiveness,” he said. With the Trump administration, he noted, there has been “a real shift” in the Republican Party, which now advocates for the government’s increased role in research and development (R&D) and growing skilled workforce. “To me, this is a somewhat of a bellwether, it really signals something that Republicans now take competitiveness in China very seriously.” The strategy to maintain U.S. leadership in emerging technologies includes substantial investments in R&D, according to the White House plan. Other priorities include developing a skilled workforce, reducing regulatory barriers, and partnering with like-minded allies. The plan has two pillars: promote the national security innovation base and protect technology advantage. R&D expenditures are important as it reflects a country’s commitment to growing its capabilities in innovation and technology. The United States led the world in R&D expenditures in 2017, according to the National Science Foundation’s (NSF) Science and Engineering Indicators 2020 report. However, its global share since 2000 has fallen as R&D spending rose substantially in China. China has increased its R&D spending by more than 17 percent annually between 2000 and 2017. During the same time frame, U.S. R&D spending growth stood at only 4.3 percent, according to the NSF report. The Trump administration also has made regulatory reform a centerpiece of its agenda for critical technologies, according to Atkinson. For example, the administration last year took an important step to streamline the regulatory review process for agricultural biotechnology products in an effort to reduce delays and costs and provide certainty for farmers. “Before that, it was much harder to put the new technologies into farms,” Atkinson said. Just recently, the Federal Aviation Administration also streamlined new technology rules around deploying commercial drones for delivering products, he said, adding that these sorts of actions have made it easier to deploy innovation into the marketplace. Partnering with like-minded countries, which is another priority for the administration, is crucial to ensure that these new technologies are used in ways that underpin American values. “The CCP is twisting technology, particularly around AI—in ways that do not in any way reflect the way the United States uses these things,” a senior administration official told reporters on Oct. 15. “So when AI is used to imprison ethnic minorities, used to surveil populations, this is not the vision that the U.S. sees for artificial intelligence, and that’s why we’ve partnered with like-minded nations.”

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