Issue No. 5, Fall 2020

Enterprise Report Restoring Liberty, Opportunity, and Enterprise in America

Taking the Long View By Robert Doar

In the late hours of November 3, as election night turned into morning and the results hung in the balance, AEI’s James Pethokoukis tweeted out a chart showing wage change in low-wage industries between 2007 and 2019. Pethokoukis was pointing out that during 2018 and 2019, earnings for low-skilled workers grew by 4.1 percent, rising much faster than those in middle-wage and high-wage jobs. That improvement, after years of slower growth, showed up in the election returns with President ’s continued popularity among working-class, non-college-educated Americans. It appeared to Pethokoukis, America’s best journalist covering economics, that these workers were rewarding a politician who had delivered for them in a big way. Other AEI scholars including Timothy P. Carney, Matthew Continetti, Yuval Levin, and Charles Murray have contended that culture is at least as important as economics in explaining Trump’s popularity. Resentment toward elites, amplified by issues like racial preferences in college admissions and failure to support the rule of law and order in the streets, has led these voters to turn away from a Biden ticket that made little effort to address their concerns. The president’s strength on Election Day could also have been the result of what AEI Director of Economic Policy Studies Michael R. Strain called the “smothering” “Throughout this campaign, AEI scholars have remained engaged with the immediate issues of the day, the back and forth of politics and policy— and that is good. Our scholars should be in the world, not above it.”

macroeconomic effects of Joe Biden’s proposed tax increases. Facing the prospect of extended lock- downs and corporate tax increases that could erase job gains and cut off an economic recovery, many voters cast ballots with these considerations in mind. Exit polling found that voters’ top priority this election was the economy and jobs, beating coronavirus by a significant margin. It now appears that Biden has won the White House despite the president’s apparent advantages on economics and culture with working-class voters. And the key to Biden’s success may have more to do with Trump himself than anything the former vice president was offering. Trump’s problem may not be Robert Doar his deeds, or even his policy positions, but rather his words. As AEI’s Marc A. Thiessen pointed out, AEI President and Morgridge Scholar Trump’s presidency was best viewed with the sound off. Throughout this campaign, AEI scholars have remained engaged with the immediate issues of the day, the back and forth of politics and policy—and that is good. Our scholars should be in the world, not above it. But our most lasting work comes when we take the long view. There is no better example of that than Nicholas Eberstadt’s Irving Kristol Award speech, which laid out the challenges our country will face in years to come and sketched a path forward that keeps America free, prosperous, and strong. As Eberstadt put it so well, “There is a magnificent American future ahead, just waiting to be built.” No matter the outcome of any single election, our leaders will continue to need research with a long-term perspective, the kind of work that addresses our country’s most serious and persistent issues. Works like, for example, Angela Rachidi’s report on health and poverty demonstrating the importance of employment in helping people overcome health challenges. Or Sally Satel’s heartfelt account of health care in rural Ohio illustrating the consequences of our opioid epidemic. Or Benedic N. Ippolito’s recent paper on surprise medical bills offering solutions to this vexing problem. Nine of our scholars have also come together to produce a new joint volume, Governing Priorities: Advice for America’s President, for 2021 and Beyond, which out- lines the most pressing policy concerns for our country and suggests critical reforms. In the coming years, the next administration will face enormous challenges. Despite constraints like a rising national debt, a looming entitlement crisis, and intractable partisan polarization, the next White House will be expected to implement policies that promote economic flourishing, maintain our place on the world stage, and push us to live up to our highest ideals. Our scholars’ advice offers a road map to navigate these complex challenges. Our best research mixes these two worlds, simultaneously responding to current controversies while offering long-term solutions. New AEI Resident Scholar Kevin R. Kosar’s studies on mail-in voting, for example, illustrate that kind of work. In a period of heightened uncertainty and an election that featured unprecedented mail-in ballots, Kosar’s work provided a crucial resource for policymakers and pundits around the country. But he also illustrated crucial areas for reform in our Postal Service that will inspire forward-thinking action. With this kind of research, AEI will continue to shape the contours of both the political debate and the policy conversation for years to come. Thank you, as always, for your support of AEI. Your commitment to our shared values allows our scholars to advance the ideals we cherish. We are grateful to count you as a partner in this endeavor. AEI Scholars Explain AEI Awards Nicholas Eberstadt CARES Act Benefits the Institute’s Highest Honor for Donors The Coronavirus Aid, Relief, and Economic Security (CARES) Act includes time-sensitive incentives for charitable giving in 2020. To encourage giving during the pandemic, the deduction for cash contributions to public charities is no longer limited to 60 percent of a taxpayer’s adjusted gross income (AGI). A donor can fully deduct cash gifts equal to as “As we look beyond COVID, we have the opportunity to repair America’s much as 100 percent of AGI this pre-pandemic flaws. We should be seeking a social and economic year. Additionally, corporations revitalization of our nation, a bold and thorough overhaul of our public can now deduct up to 25 percent and private ways to spark a dynamic upswing in progress for everyone. of taxable income, an increase The vision, the design, should be prosperity for all. This can be done. And we from 10 percent. can be the ones to do it. A revitalized America is a prize worth fighting for.” We asked AEI tax scholars Alex Brill —2020 Irving Kristol Award winner and and Alan D. Viard to explain how this Henry Wendt Chair in Political Economy Nicholas Eberstadt tax policy change affects charitable giving this year. On October 14, AEI hosted the Irving Advice for America’s President, for Kristol Virtual Lecture and Summit, 2021 and Beyond. The volume features honoring Nicholas Eberstadt, the AEI concrete policy recommendations How does this provision make giving Henry Wendt Chair in Political Economy, from nine AEI scholars (including the in 2020 more advantageous? in recognition of his powerful insights on panelists) on actions the next presidential What does this provision change? myriad policy issues at the intersection administration can take to spark American Who does this apply to? of economics, social trends, and foreign revitalization across policy areas. policy. Eberstadt’s lecture reflected on The Irving Kristol Virtual Lecture and Section 2205 of the CARES Act reinvigorating our nation’s future after Summit aired live on C-SPAN 2. You can provides that taxpayers with charitable COVID-19 by fostering the conditions view a recording of the lecture and panel giving greater than 60 percent of their required for human flourishing. at www.aei.org/research-products/ AGI continue to receive the marginal Building on these themes, AEI speech/2020-irving-kristol-award- tax reward for giving (37 percent in scholars Yuval Levin, Kori Schake, remarks/ and find theGoverning the top bracket), just as is provided to Michael R. Strain, and Ryan Streeter Priorities essays at priorities.aei.org/. taxpayers giving less than that amount. participated in a panel discussion on Those taxpayers can claim more the new AEI book Governing Priorities: of a charitable deduction (up to 100 percent of AGI) in the year of the donation instead of needing to carry forward the deduction into future AEI relies on the financial backing of private individuals, foundations, and years, which makes the deduction corporations that share our values and support our aims. As a nonpartisan, more valuable and should result in 501(c)(3) organization, AEI does not take institutional positions; does not more charitable giving. There is no accept funding from US or foreign governments, including state-owned or impact on taxpayers with contributions state-operated subsidiary entities; and does not perform contract research. equal to or less than 60 percent of AGI. This policy maintains our scholars’ complete independence and credibility in Notably, this more generous policy debates. To learn more or support AEI, visit www.aei.org/donate/. charitable giving policy is set to expire at the end of 2020.

3 Leadership Network Virtual Cohort: By the Numbers

Average summit rating: 8.7 out of 10. Their average age is 41. They hail from 38 states.  

said the summit was well 99% organized and professional.

  said they are more likely to get 96% involved and stay in touch with AEI in the future.

 said the summit’s intellectual 89% content was valuable to their work.

 of the new cohort Leadership Network 44% is female. represent a minority AEI Convenes First Virtual Summit 30% community. “The summit was, far and away, the best professional development event I’ve attended in a long time. I’m excited to be part of the Leadership Network because I know I’ll be able to further my own professional work and connect Leadership Network in a meaningful way with other leaders, all while improving my knowledge Celebrates 1,000th Member about policy issues that affect my community. ” — JENNIFER K. THOMPSON, executive director, Center for the Study of Liberty “I appreciate being a part of the Leadership Network, because it matters that people sit in rooms On September 22–24, AEI hosted the Riley, Ian Rowe, Katharine B. and talk with each other. America’s first virtual Leadership Network Summit. Stevens, Stan Veuger, Adam J. path forward has to include better understanding people and White Scott Winship In addition to welcoming 171 new , and . communities across the country members to the Leadership Network, The virtual platform also allowed us to and allowing space to discuss and more than 200 existing members also create presummit briefing materials work through our differences. Only participated in this educational and that used a wide range of AEI products, then can we bring people together— professional development program including videos, podcasts, and written and together, we’re better.” that connects state-based leaders with pieces. These “Inspiration Modules” AEI scholars’ work. AEI’s Leadership were available to all participants a month We were delighted Network now numbers more than before the conference to familiarize them to welcome 1,000 members from 46 states, Canada, with AEI scholars’ work and inspire them Amanda Aragon and the United Kingdom. to start thinking about public policy from New Mexico as To facilitate this event during the solutions in their communities. our 1,000th member COVID-19 crisis, we built an innovative Participants also enjoyed a wide of the AEI Leadership virtual platform that enabled us to run range of networking options and Network. In 2018, multiple sessions concurrently and professional development sessions she founded NewMexicoKidsCAN, featured small-group discussions by led by AEI staff and fellow Leadership an education advocacy organization. region, issue area, and field. Altogether, Network members. In our follow-up Previously, Aragon was the director of the summit featured 42 unique sessions survey, participants not only commented stakeholder relations for ConocoPhillips over three days of programming, includ- on the high quality of the online in New Mexico and the director of ing 14 sessions running concurrently on experience but also praised the strategic outreach for the New Mexico the first day, as well as 36 speakers and opportunity to connect with curious, Public Education Department. In 2015, moderators. Of the 36 speakers, thoughtful leaders from across the Aragon was named a top business 21 were from AEI, including John P. political spectrum in respectful, professional under 30 by Albuquerque­ Bailey, Karlyn Bowman, Arthur C. lively debate. Business First. Aragon was born and Brooks, Robert Doar, Jonah raised in Albuquerque and was the Goldberg, Scott Gottlieb, Frederick To learn more about the first person in her family to graduate M. Hess, Yuval Levin, Brent Orrell, Leadership Network, please from college. Angela Rachidi, Naomi Schaefer contact [email protected].

4 New AEI Scholar Atlantic Staff Writer Joins Kevin R. Kosar Sheds Light on AEI as a Visiting Fellow Andrew Ferguson, Troubles at US Postal Service a celebrated journalist and writer, recently New AEI Resident Scholar Kevin R. Kosar In September, Kosar published an joined AEI’s Social, is one of the nation’s foremost experts on AEI report, “Separating Myth from Fact Cultural, and Constitu- the United States Postal Service (USPS) and About the Troubles of the Postal Service,” tional Studies research has been a crucial source of informed and and he has been active in print and division as a visiting timely analysis on the challenges facing televised media coverage surrounding fellow. Currently a staff the agency. As USPS’s issues—including postal issues, appearing in outlets writer at the Atlantic, Ferguson has written for high fixed costs, stagnant revenue, and including , Politico, and outlets including the New Yorker, New York unfunded liabilities—face increasing CNBC. In September, AEI’s media team Magazine, New Republic, , scrutiny in the midst of record-high levels held a press-conference call with Kosar Washington Post, and Bloomberg. He served of mail-in voting, Kosar has corrected to discuss USPS issues, including mail-in at as a senior editor inaccuracies in the surrounding commen- voting and its potential impact on the until December 2018. He has written several tary and proposed reforms for the agency 2020 election. He will continue to inform books, including Crazy U: One Dad’s to function in the modern world. Kosar’s policymakers and the public on the Postal Crash Course in Getting His Kid into College recommendations for the Postal Service Service’s preparedness to properly handle (Simon & Schuster, 2011) and Land of include improving its communication with the high volume of mail-in ballots and Lincoln: Adventures in Abe’s America members of Congress and the general longer-term changes to improve the postal (Atlantic Monthly Press, 2007). public, controlling operational costs, system’s sustainability. You can follow all of As an AEI fellow, he will be working on raising prices on products to respond to Kosar’s work on the Postal Service and his a new book exploring President Richard market forces, and reforming its pension research on Congress at www.aei.org/ Nixon’s cultural footprint and continuing his system to allow greater investment return. profile/kevin-r-kosar/. regular contributions to the Atlantic and other prominent outlets. AEI Publication New Documentary Edited Volume Addresses Tech Policy Regulation

AEI Resident Scholar Adam J. White on the challenges of regulating internet produced a detailed, concrete agenda platforms, the five essays in the volume of reforms to guide policymakers in include contributions by Christine Rosen confronting the challenges and opportu- (New Atlantis), Jan Rybnicek (George The Initiative on Faith and Public Life (FPL), nities presented by developments in the Mason University), and Klon Kitchen AEI’s program for Christian college students, technology sector. Facebook, Google, (Heritage Foundation). Each essay seeks released a documentary film,For Love Twitter, and other Big Tech companies play to help policymakers better grasp the of Neighbor: Politics for the Common a central role in modern society, discourse, ways in which the tech giants have come Good. Featuring commentary from and governance, raising new questions to exercise five kinds of power in recent Arthur C. Brooks, Sens. Ben Sasse (R-NE) about possible policy responses. This vol- years—market, geopolitical, informational, and Tim Scott (R-SC), Russell Moore (Ethics ume is particularly timely, as the attention cultural, and political—and develop a clear and Religious Liberty Commission), and of the public and several key policymakers sense of when and if a policy response Cherie Harder (The Trinity Forum), the film is focused on issues including the role of may be needed and how it might look. aims to spark discussion and offer a hopeful Big Tech in major elections, disinforma- White promoted the volume through vision for participation in contemporary tion about the COVID-19 outbreak, and conversations with the volume contrib- public life. The FPL team is leading a robust investigations of major tech companies by utors on his podcast, Unprecedential. marketing campaign for the film, hosting the Justice Department, the Federal Trade You can read all the essays in the volume screenings and discussions at dozens of Commission, Congress, and more. here: www.nationalaffairs.com/ colleges and churches across the country. Released as a special edition of big-tech-big-government-challeng- For more information about the film or to National Affairsfocused exclusively es-regulating-internet-platforms. learn more about hosting a screening, visit www.faithandpubliclife.com/flon/.

& to white supremacy and racism—ignores the very real issues that are far greater factors impeding the development of black Q kids and children of all races. This is why I Ian Rowe promote empowering strategies that teach young people of all races the data showing that 97 percent of millennials avoid poverty A Ian Rowe is a resident fellow at AEI, where he focuses on if they make the series of life decisions to education and upward mobility, family formation, and complete their education, secure full-time adoption. Rowe is also the cofounder of Vertex Partnership work, and marry before they have children. Academies, a new network of character-based International There has been a great deal of contro- Baccalaureate high schools opening in the Bronx in 2022; versy lately surrounding the New York the chairman of the board of Spence-Chapin, a nonprofit Times’ 1619 Project. How should we adoption services organization; and the cofounder of the approach the ideals our nation has National Summer School Initiative. He concurrently serves as espoused for the past two centuries? a senior visiting fellow at the Woodson Center and a writer for the 1776 Unites Campaign. The 1619 Project authors make remarkably Until July 1, 2020, Rowe was CEO of Public Prep, a nonprofit network of public charter outrageous claims such as “our democra- schools based in the South Bronx and Lower East Side of Manhattan. cy’s founding ideals were false when they were written” and argue that black people Your forthcoming book, tentatively What are some solutions that corporate are so powerless to close the racial wealth titled Agency, seeks to inspire young and philanthropic leaders can pursue gap that the only solution is that the federal people, regardless of race or socio- to promote mobility and opportunity for government must pay trillions of dollars to economic background, to become disadvantaged Americans? black descendants of slaves. This narrative agents of their own destiny in American Corporate and philanthropic leaders are ignores the millions of African Americans society. Why is this theme important at under enormous internal and external past and present who embraced the this moment? pressures to take action on racial justice. country’s founding ideals to move from Too often, this has led to meaningless, persecution to prosperity. Since our country’s inception, the idea performative statements on “wokeness” that a young person can become an What was your biggest lesson learned or actions that advance opportunity for no agent of her or his own uplift has been a as CEO of Public Prep? How are tradi- one but provide convenient cover. basic American promise. This does not tional responses to closing the educa- As an alternative, I am creating a frame- mean “pull yourself up by your own boot- tion achievement gap misguided? work that would empower organizational straps.” Rather, vital, mediating institutions leaders to pursue strategies that adhere to such as strong families, schools, and Focus on absolute excellence and not their core institutional values and leverage faith-based organizations would shape relative performance. Review the mission their core competencies and assets so the character of a rising, self-sufficient statement of every school that educates pri- disadvantaged Americans can have access generation. marily black and brown kids, and you will to high-impact opportunities that demand At this moment, a growing number of likely find a goal to close theachievement high-level expectations (versus asking noth- young people are being led to believe that gap between black and white children. ing in return) and enhance human dignity. structural barriers around race, class, and This narrative frames white kids as the stan- gender have rigged the system against What do you think is missing from today’s dard for which black kids should achieve. them. I am writing Agency to ensure that narratives about white supremacy and Yet, in the entire history of the National young people develop a belief in their its role in shaping our country? Why are Assessment for Educational Progress, since ability to do hard things and to know these narratives potentially damaging its inception in 1992, the majority of white that embracing—not rejecting—the for black youth? kids have never been able to read with principles of family, faith, free enterprise, proficiency. So closing the racial achieve- entrepreneurship, and hard work, The flip side of white supremacy is the ment gap would simply mean mediocrity even in the face of adversity, is their equally noxious notion of black victimhood for everyone. most likely path to a fulfilling life. and the belief that black people can’t advance unless whites “take their boots Visit www.aei.org/profile/ian-rowe/ to follow all of Rowe’s work. off of our necks.” This mono-causal view of the world—that every racial disparity is due

6 Foreign and Defense New AEI Fellow Retired Major General Joins AEI Defense Team Elisabeth Braw Joins Maj. Gen. John of warfighting. A big-picture strategist, AEI as a Visiting Fellow Ferrari (ret.) Gen. Ferrari brings to AEI a new skill recently joined set and focus on the importance of AEI welcomed AEI as a visiting big data, artificial intelligence, and Elisabeth Braw as fellow. His work 3D manufacturing. a visiting fellow in the will further bolster Gen. Ferrari is concurrently the Foreign and Defense AEI’s defense chief administrative officer at QOMPLX, Policy Studies team, which a data analytics and cybersecurity department. She is includes Giselle Donnelly, Mackenzie firm. His Army service included roles also a columnist with Eaglen, William C. Greenwalt, as the commanding general of the Foreign Policy, where Elaine McCusker, and Gary J. Schmitt. White Sands Missile Range, a deputy she writes on national security and the After a 32-year Army career, culminating commander for programs at the globalized economy. At AEI, Braw is in his role as the director of program NATO Training Mission in Afghanistan, leading a major project on deterrence analysis and evaluation, Army G-8, and a strategic planner for the against emerging forms of aggression, Gen. Ferrari will lend his years of Combined Joint Task Force such as hybrid and gray-zone threats, experience assessing the US Army’s key Seven in Iraq during Operation and non-kinetic operations including strategic and operational objectives Iraqi Freedom. cyberspace operations. Braw joined to research and discussions on military You can find all Gen. Ferrari’s work at AEI from the Royal United Services technology innovation and the future www.aei.org/profile/john-g-ferrari/. Institute for Defence and Security Studies in London. Previously, she was an asso- ciate fellow at the European Leadership Network, a senior fellow at the Atlantic Find all the work of AEI’s Foreign and Defense Policy scholars here: Council, and a senior consultant at Control www.aei.org/policy-areas/foreign-and-defense-policy/. Risks, a global risk consultancy. Find all of Braw’s work at www.aei.org/profile/ elisabeth-braw/.

New Edition A Hard Look at Hard Power Schmitt Provides an Updated Assessment of Allies’ Military Capabilities

“This updated volume could not be a more timely contribution to the debate over national security as Americans assess what kind of role the US can and should play in maintaining global order. Every serious analyst of international affairs will need to reckon with its findings.”

— ERIC S. EDELMAN, former undersecretary of defense for policy and co-chair of the National Defense Strategy Commission

Resident Scholar Gary J. Schmitt specialists, college and graduate budgets. It provides a timely reassess- released a new edition of A Hard Look students, and members of the United ment of our military allies and security at Hard Power: Assessing the Defense States military, the volume asserts that partners in a world where the United Capabilities of Key US Allies and Security the United States needs allies and States faces two major revisionist powers, Partners (Army War College Press), partners that can pull their weight Russia and China, and additional security updating his 2015 edited volume and militarily if we are to maintain a favorable threats from North Korea, Iran, and providing an in-depth look at key balance of power in crucial regions. jihadist terrorism. European and Asian allies and partners. The volume covers the selected You can find more information about Aimed at an audience of academics in countries’ strategic outlooks, military the volume at www.aei.org/hard-look- the national security field, country and area capabilities, future plans, and defense at-hard-power/.

7 New Series Robert P. George Leads New Lecture Series as AEI Visiting Scholar

Robert P. George, Princeton and featured Levin and George in University’s McCormick Professor conversation with Rabbi Lord Jonathan of Jurisprudence and director of Sacks on Sacks’ new book, Morality: the James Madison Program in Restoring the Common Good in American Ideals and Institutions, Divided Times (Basic Books, 2020). recently joined AEI as a visiting The recording can be found at scholar. In his role at AEI, George www.aei.org/restoring-the- is leading a new lecture series, common-good/. “E Pluribus Unum: Sources of Our Unity,” a joint program between AEI Yuval Levin, or University of Dallas and the University of Dallas. President Thomas Hibbs and prominent The series focuses on finding unity figures in our public life, either discussing across axes of difference in our society— the challenges of unity or exploring what left and right, religious and secular, divides and unifies society. urban and rural, and more. Each lecture The first lecture in the yearlong features conversations with George, series took place on September 18 Senior Federal Reserve Economist Make Free Enterprise Joins AEI as Resident Scholar Your Legacy

After a 32-year this crisis. In October, he coauthored a For more than 80 years, AEI scholars have career at the Federal Federal Reserve working paper providing been tackling our nation’s greatest Reserve, Steven B. the first systematic look at the relation- challenges by producing work that Kamin joined ship between pandemic outcomes and bolsters free enterprise and innovation, AEI this fall as a financial developments in a wide range of strengthens our communities, defends our resident scholar. emerging market economies. nation’s founding values, and revitalizes He most recently In addition to his focus on emerging America’s leadership in the world. One of served as the direc- markets and international economics, the best ways you can ensure that AEI can tor of international finance at the Federal Kamin will study the problem of the carry out this mission far into the future is by Reserve Board and principal adviser of “corporate savings glut,” or companies including AEI in your life and estate plans. international economic and financial using their profits to make loans to other Planned gifts provide AEI with long-term policy matters to the Federal Reserve sectors rather than for investment. He will financial stability, guaranteeing the Institute chair. Kamin’s main focus at AEI thus far also provide regular commentary on the has the means to continue our important has been examining how the COVID-19 Federal Reserve’s actions and monetary work for years to come. Major ways of pandemic is affecting the global econ- policy. You can follow all of Kamin’s making a planned gift include will or trust omy, particularly how emerging markets work at www.aei.org/profile/ provisions, charitable remainder trusts, and and poor countries are faring during steven-b-kamin/. charitable lead trusts. For more information, please visit www.aei.org/donate-about/ AEI Honors planned-giving/ or contact Nicole Ruman Skinner ([email protected]; Legacy Society Member 202.862.7180). AEI would like to express our deepest gratitude to a remarkable and longtime AEI Legacy Society member, Althea Davidson of DeForest, Wisconsin, who passed away in April at the age of 91, leaving a bequest of more than $1 million American Enterprise Institute to AEI. In addition to her incredible bequest, she gave faithfully to the Institute 1789 Massachusetts Avenue, NW for more than 10 years. As a self-taught and successful stock market trader, she Washington, DC 20036 read daily, paying particular attention to the work of AEI 202.862.5800 | aei.org economists. We are honored that Mrs. Davidson chose to include AEI as a part 8 of her tremendous legacy.