This page was reviewed but not written by the grant investigator. Center on Budget and Policy Priorities (CBPP) staff reviewed this page prior to publication.
The Open Philanthropy Project recommended an exit grant of $250,000 to the Center on Budget and Policy Priorities (CBPP) to support the Full Employment Project. This is a renewal of our July 2016 grant and falls within our focus area of macroeconomic stabilization policy. We continue to think the Project’s work is important but do not have a clear sense of how much of a difference marginal funding makes in driving that work forward. This grant will bring us to five years of supporting the Full Employment Project, and at this point we want to take the opportunity to step back and see if other funders may be interested in supporting the Project.
This page was reviewed but not written by the grant investigator. CBPP staff also reviewed this page prior to publication.
The Open Philanthropy Project recommended a grant of $100,000 to the Center on Budget and Policy Priorities (CBPP) to support work on enhancing automatic fiscal stabilizers. Automatic fiscal stabilizers are taxes and government programs that respond automatically to changing economic conditions, and do not require additional Congressional action. They are important for mitigating the effects of economic downturns. We believe CBPP, which has done work in this area before, is a strong candidate to advance these policies given its combination of relevant relationships and deep knowledge of these issues.
CBPP staff reviewed this page prior to publication.
The Open Philanthropy Project recommended a grant of $425,000 to the Center on Budget and Policy Priorities (CBPP) to support the Full Employment Project.
This grant is a renewal of our 2014 grant to CBPP, and falls within our work on macroeconomic stabilization policy. It is also one in a series of grants attempting to build up the capacity of progressive think tanks on macroeconomic policy issues we see as important.
We would characterize the work that these grants will support as falling into two main areas:
Preparing for the next U.S. recession, which we would guess is likely to occur before interest rates return to “normal” levels.1 This could include exploring:
Monetary policy tools that the Federal Reserve (“the Fed”) could use if it were to return to the zero lower bound on nominal short term interest rates, such as quantitative easing or a change to the inflation target
Proposals for automatic stabilizers that Congress could put in place to reduce the need for discretionary responses to the next recession
Proposals for novel fiscal stimulus measures in case a recession does strike
Making the case for the importance of continued focus on reducing unemployment and against premature monetary tightening today. We think it will eventually be appropriate to raise interest rates but that the Fed is more likely to raise prematurely than belatedly, and that doing so carries greater welfare costs, so we see value in supporting work that argues for a continued focus on unemployment.
This grant to CBPP will support its continued work on the Full Employment Project, which we wrote about in more detail on our page about our previous grant to CBPP. Our understanding is that our marginal funding will support CBPP to undertake a project commissioning outside macroeconomists to develop their own estimates of potential output of the U.S. economy, based on the possibility that the Congressional Budget Office’s estimate may be too low. This project is related to the second bullet above.
Our key uncertainty for this grant, along with our other grants to think tanks for work on macroeconomic policy, is whether work by think tanks on these issues is likely to sway decisionmakers at the Fed or in Congress. We would guess that the work we support is relatively unlikely to affect policy, but that if it did our support would be justified many times over, and we see that as a bet worth taking.
Federal Reserve Bank of St. Louis, Effective Federal Funds Rate
Center on Budget and Policy Priorities (CBPP) staff reviewed this page prior to publication.
Note: This page was created using content published by Good Ventures and GiveWell, the organizations that created the Open Philanthropy Project, before this website was launched. Uses of “we” and “our” on this page may therefore refer to Good Ventures or GiveWell, but they still represent the work of the Open Philanthropy Project.
We would guess that CBPP may be able to pursue the majority of the planned work in the absence of outside funding, so support for the project is likely to be at least somewhat fungible with CBPP general support. Although we have not investigated it exhaustively, we have a generally positive view of CBPP’s track record, and are interested in learning more about their approach and historical impact. In addition, we see macroeconomic policy as an important and relatively neglected area, and see this as a good opportunity to support additional attention to it, though estimating the expected value of the specific proposed work is extremely difficult. These considerations, in addition to the chance to explore research and advocacy around macroeconomic policy as a potential focus area, seem sufficient to justify a grant.
Based on these considerations, Good Ventures decided to grant $335,000 to the Center on Budget and Policy Priorities.
The Center on Budget and Policy Priorities (CBPP) submitted the following documents in association with this grant:
The Center on Budget and Policy Priorities (CBPP) is a Washington, D.C.-based think tank that works on “fiscal policy and public programs that affect low- and moderate-income families and individuals.”5 It had an annual budget of about $22 million in 2013, with 65% of its support coming from institutional foundations.6
Our impression is that CBPP’s research is generally regarded as left-leaning but both influential and intellectually credible, though we have not formally vetted this impression.7 In an April 2014 meeting with GiveWell and Good Ventures staff, Robert Greenstein, CBPP’s President, gave an overview of CBPP’s work and some examples of their historical impact:8
CBPP played an important role in the emergence of the Congressional consensus in favor of fully funding the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).9
CBPP helped develop and championed a proposal to have infant formula manufacturers bid competitively for contracts with WIC programs, which now results in $1.8 billion/year in savings for these programs according to the USDA.10
CBPP created a process for states to near-automatically enroll people applying for food stamps in Medicaid if they are eligible, which has resulted in 613,554 people being enrolled in the first six months of 2014 according to official Medicaid figures.11
We have not vetted these claims, but see them as unusually concrete, and as suggestive of potentially high historical cost-effectiveness.
In 2013, CBPP received $130,000 from the Rockefeller Foundation to support initial work on the Full Employment project.12 That work consisted of commissioning roughly half a dozen short papers on policy proposals to promote full employment (ranging from work sharing to subsidized jobs), which were released at an event at the National Press Club in April 2014.13 We have not undertaken a systematic assessment of the policy proposals that were discussed. On an initial read, some strike us as positive and potentially important proposals, while some others we would be hesitant to endorse.14 The event was covered in blog posts by the New York Times, Washington Post, New Republic, and a few other outlets.15
Project goals and proposed activities
The project will be run by CBPP Senior Fellow Jared Bernstein, an economist who previously worked as Chief Economist for Vice President Joe Biden and as a senior economist for the liberal Economic Policy Institute.CBPP anticipates that the 28-month, $1 million project will focus on three policy goals:16
Getting to full employment, both by 1) reducing the depth, length, and adverse effects of recessions, — especially their impact on jobs — by securing more effective stabilization policies; and 2) spurring more robust job creation in economic recoveries so that the economy is more often at or near full employment. The benefits of full employment, in terms of wages and living standards, are most helpful to low- and modest-wage workers.
Setting a policy agenda for the next recession: This goal is closely related to the one above. Despite various shortcomings, the safety net and monetary and fiscal policy generally were effective in preventing the Great Recession from becoming an even more severe downturn. This point is not sufficiently appreciated, however, and that risks leaving the nation unprepared for effective responses to the next downturn. As part of the Project, we will review the effectiveness of various measures taken in response to the recession and propose ways to develop effective responses to the next recession.
Repairing ongoing damage from the Great Recession, such as the decline in labor force participation, and improving workers’ skills — and thereby raising “potential GDP” (i.e., the size of the economy at full employment). A larger full-employment economy produces higher incomes.17
Anticipated activities of the Full Employment Project include, amongst others:
Commissioning a paper by Larry Summers and Larry Ball on reversing hysteresis.18
Commissioning papers on the returns to different components of the 2009 stimulus package and what components an optimal fiscal stimulus package in the future should include.19
Developing options for strengthening automatic stabilizers, such as automatically increasing the federal component of state Medicaid costs during recessions.20
Assessing how various proposals to change countercyclical federal safety net programs into state block grants would affect their role as automatic stabilizers.21
Developing more detailed policy proposals around work sharing, job training and apprenticeship, and infrastructure investment.22
Making the case for “full employment” as a policy goal on a day-to-day basis by writing and appearing in the media.23
We see room for more funding and fungibility considerations as unusually important in this case. The basic breakdown of the project budget is24:
~75% salaries and benefits. This includes 65% of Jared Bernstein’s time, 25% of CBPP chief economist Chad Stone’s time, ~100% of a FTE junior employee (split across a research assistant and communications associate), a total of ~30% FTE of other senior staff members, and ~$20K of admin time.
~13% convenings, commissioned papers, communications consultants, and travel.
~13% CBPP overhead.
While the counterfactual is difficult to articulate, our best guess is that the majority of the senior staff time allocated to the project would be allocated similarly in the absence of outside funding, but that they would not have the same research assistance or communications support (or much ability to host convenings or commission papers). Overall, our guess is that 50-75% of the activities associated with this project would happen in the absence of outside funding (which is the same as saying that 50-75% of the support for this project is effectively general support for CBPP). In conversation, Robert Greenstein estimated that the appropriate figure is closer to 50% than 75%.25Accordingly, we think it is appropriate to base much of the decision about whether to support this project on a broad assessment of CBPP.
Our understanding is that CBPP currently plans to approach two other funders about supporting part of this project; we do not have a strong sense of how likely those requests are to be met.26
Case for this grant
Our primary reasons for making this grant are:
CBPP’s proposed projects comport well with our provisional take on important topics for research and advocacy in macroeconomic policy. We have not yet attempted to fully document our thinking behind which topics are important and why, as doing so would take more time than we wish to devote at this stage of our investigation.
We have a high degree of interest in CBPP as an organization in general (more above), and see substantial value in more interaction with CBPP in general (not just within the cause of macroeconomic policy).
We would like to learn more about how CBPP approaches new policy areas – something this grant provides an opportunity for – and we also see CBPP as a potential general resource on U.S.-policy-related work. As stated above, we have seen multiple highly concrete claims about CBPP’s past impact, and may investigate one or more via our history of philanthropy project.
Because of the above point, we are comfortable with the potential fungibility of this grant. That said, CBPP guesses that in the absence of outside support, they are unlikely to be able to do the work on automatic stabilizers and countercyclical fiscal policies (bullets 2 and 3 in the list above)27.Those projects strike us as particularly valuable ones, though it is extremely difficult to estimate their expected value.
Beyond direct impact, there are notable benefits to making some early grants in a cause we are exploring (as is the case with macroeconomic policy). As we have written previously, making such grants can be an important part of the process of learning what giving opportunities exist. They can also improve our contacts for a given cause and make it more likely that future giving opportunities will come our way.
Risks to the success of the grant
The most salient risks we see to the success of the grant are that marginal general support to CBPP does not have much impact or that the Full Employment project proposals will fail to achieve the traction necessary to have an impact on policy. We see the current political climate as a substantial obstacle to any successful federal advocacy work, and would guess that it is more likely than not that there will not be any discernible near term policy changes as a result of our support.
We also see a possibility that the grant could cause harm, though we regard it as very unlikely, for much the same reason that we see large positive impacts as relatively unlikely. The most likely path through which we could imagine having a negative impact is through the enactment of a policy that turns out to be harmful from our perspective. Although we aren’t fully confident that all of the Full Employment proposals would be beneficial, we are more confident in the ones we understand that they plan to focus on, and we would guess that proposals that turn out to be unwise would also be less likely to be enacted following further development.
Based in part on the fact that CBPP was planning to approach three funders for this project, we decided to grant $335,000 in two tranches to support the 28-month project. Since we see support for this project as largely fungible with CBPP general support, we expect to make the grant formally unrestricted.
Plans for learning and follow-up
Key questions for follow-up
Questions we hope to eventually try to answer include:
What activities does the Full Employment Project end up prioritizing? We would guess that there will be some unanticipated variation in which activities receive the bulk of the project’s attention. (This question is not at all meant to tie CBPP’s hands, but just to allow us to understand which projects they end up working on.)
How do we assess the quality and impact of the project’s research? We have looked at the work they’ve commissioned so far, but we haven’t attempted to thoroughly assess its reliability or policy impact. We may rely on CBPP’s efforts to track media mentions as an intermediate indicator of likely impact.
What impacts, if any, does the project appear to have on policy? We expect this question to be particularly challenging to answer, and do not expect to be able to do so with a high level of confidence.
What do we learn from CBPP and their approach to a new policy focus area? Do we benefit from the relationship in other ways (e.g. by hearing about other grant opportunities or having greater access to others)?
We expect to have a conversation with Jared Bernstein every 3-6 months for the duration of the grant to learn about the status of the project, with public notes if the conversation warrants it.
Towards the end of the duration of the grant, we plan to attempt a more holistic and detailed evaluation of the grant’s performance, aiming to answer the questions above.
We may abandon either or both of these follow-up expectations if macroeconomic policy ceases to be a focus area, or perform more follow-up than planned if this work becomes a key part of our priorities.