How hateful rhetoric connects to real-world violence

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• Hamas tries to seize the day
• COVID-19 vaccines: The endgame
• What pre-pandemic job trends suggest about the post-pandemic future of the capital region
• Tax carbon and consumption, not middle class income
• Indiana’s plan to use COVID-19 relief to uplift its struggling regions

Hamas tries to seize the day Posted: 12 May 2021 01:18 PM PDT By Daniel L. Byman The latest round of Israeli-Palestinian fighting began in Jerusalem, but it has spread throughout Israel and to Gaza. The bloodshed could become more intense, leading to another Israeli ground operation in Gaza and far more casualties than we've already seen. Even if Israel batters the Hamas leaders in Gaza into submission, the violence threatens to further weaken peaceful Palestinian voices, help Hamas overcome its many weaknesses, and create new rifts within the state of Israel. The latest conflict grew out of threatened evictions of Palestinians from the Sheikh Jarrah neighborhood in Jerusalem and was magnified after provocative Jewish settler marches through Arab areas of the city, with some marchers chanting "death to Arabs." Violence spread to the Al-Aqsa Mosque compound, one of the holiest sites in Islam, and an Israeli police raid on the venerated mosque — including the use of stun grenades on worshipers demonstrating there — set off more demonstrations. At the same time, Israeli officials tried to deescalate, postponing the evictions and rerouting a potentially provocative parade by religious Jewish nationalists. Things took a dramatic turn on Monday, when Hamas and another Islamist group, Palestine Islamic Jihad, sent massive salvos of rockets into Israel, firing them toward Jerusalem, with claims of defending the holy mosque and Palestinians there against Israeli aggression — the first rocket attacks on Jerusalem since 2014. Israel then responded with airstrikes on Gaza, which Palestinian health officials claim have killed 53 people, including 13 children, as of Wednesday afternoon. Hamas launched more rockets at Tel Aviv, as well as targets closer to Gaza, such as Ashkelon. Residents of cities targeted by the rockets are forced to hide in shelters and rocket attacks have killed seven Israelis, increasing pressure on the Israeli government to act. Arab citizens rioted in several Israeli cities and towns. In mixed Jewish-Arab cities, including Jaffa but especially Lod (Lydda) and Acre, communal violence not seen in decades included mobs attacking civilian homes, synagogues, and property, with vigilante violence and reprisals. Why would Hamas fire rockets and make the situation worse, knowing that Israel will hit Gaza hard? Hamas has long faced a dilemma as it tries to balance its roles as the government of Gaza and as the leading Palestinian resistance group to Israel. Neither seemed to offer a path to becoming the uncontested leader of the Palestinian national movement and ultimately defeating Israel. As the de facto ruler of Gaza since 2007, Hamas has succeeded in keeping power despite Israeli, U.S., and international pressure, as well as repeated Israeli military incursions. The isolation, however, prevents Gaza from growing economically and keeps the humanitarian situation dire. As a result, Hamas is unable to provide economic growth or other benefits to Gazans and demonstrate it is an effective leader of the Palestinians. At the same time, Hamas faces challenges when it attacks Israel. As the latest strikes demonstrate, Israel will not hesitate to hit Gaza hard in response to Hamas provocations. Israel and Hamas have squared off in major confrontations in Gaza in 2008-09, 2012, and 2014, as well as numerous small attacks and responses in between. Gaza has come off the worse for these, and Palestinian suffering has been enormous. Hamas killed few Israelis in these confrontations, but it has solidified its hold on power. The destructive Israeli response is intended to send a message that violence will backfire and make it harder for Hamas to portray its leadership of Gaza as a success. Hamas has also suffered as the Middle East has changed and hope for foreign support has declined. The Arab Spring, the civil war in Syria, and other political earthquakes made the Israeli-Palestinian issue less politically salient for many people in the region and around the world. Major shifts that once would have riveted world attention, like the United States' move of its embassy to Jerusalem, generated little meaningful outrage. The signing of the Abraham Accords, which formalized a peace between Israel and the United Arab Emirates, was another nail in the coffin and was followed by peace deals with Bahrain, Morocco, and Sudan. Despite the unresolved Palestinian issue and the problems in Gaza, the region was moving on. Hamas' hostile relationship with President Mahmoud Abbas and the rest of the leadership of the Palestinian Authority, which controls the West Bank, makes its dilemma even more difficult. Rivals for leadership of the Palestinian national movement, they differ on their willingness to negotiate with Israel, support for violence, and other fundamentals. Both sides see the relationship as zero-sum and often design their policies toward Israel as a way of gaining an advantage over the other. Israel's hope is that, through isolation and military punishment, Hamas' allure will diminish. This has worked, to a degree, in that poor living conditions in Gaza and the perks its leaders enjoy have tarnished Hamas' popularity. Yet Hamas remains firmly ensconced in power in Gaza, and Israel and the Palestinian Authority fear that Hamas will also take power in the West Bank, either through elections or through a forceful takeover. This would be a nightmare for Israel. The West Bank is far closer to the biggest Israeli population centers (and often on higher ground), and a significant Hamas presence there could lead to far more dangerous rocket strikes and terrorist attacks on Israel. To prevent this nightmare, Israel has worked closely with the Palestinian Authority to suppress Hamas in the West Bank. The postponement of elections scheduled for April of this year has snuffed out, or at least temporarily set back, Hamas' hopes to win an electoral victory. Hamas, however, has one huge advantage: the weakness of its Palestinian rivals. The Palestinian Authority is corrupt, divided, and unpopular. Its leader, the uninspiring Abbas, is 85 years old, with no clear successor. Fatah, the movement he leads, is less competent than Hamas and inspires little loyalty. Perhaps most importantly, Abbas bet heavily on negotiations with Israel. The lack of negotiations, or even the chance of serious peace talks, raises the obvious question: How does Abbas and the movement he leads hope to end the Israeli occupation? The violence over Sheikh Jarrah is thus tailor-made for Hamas. The evictions in Jerusalem and the initial heavy-handed police response meant much of the world believes Israel started the latest round. Unrest in Jerusalem captures world — especially Muslim world — attention. Military strikes by Hamas allow it to claim it is defending Palestinians while the Palestinian Authority stands by amidst, or even abets, the occupation through its cooperation with Israel. Israel has already hit Gaza hard and may escalate further, both through more airstrikes and perhaps on the ground, leading to more death and devastation there. Hamas will continue rocket attacks in response, killing few Israelis but terrorizing many. As ordinary Palestinians and Israelis suffer, Egypt and other neighbors, perhaps with U.S. nudging, may try to defuse the situation, with Israel ending attacks on Gaza while making a few token concessions to ease its economic isolation so Hamas can claim some victory. The world spotlight will quickly move on to another crisis, and, over time, the devastation and misery in Gaza will erode any brief spike Hamas might enjoy from its attacks on Israel. And then we'll wait for the next round. This posting includes an audio/video/photo media file: Download Now

COVID-19 vaccines: The endgame Posted: 12 May 2021 01:18 PM PDT By William A. Galston, Elaine Kamarck In the past four months the COVID-19 vaccination campaign has gone from a desperate, chaotic search for scarce vaccines to enough vaccines for everyone who wants one. The problem now is different; in order to get to herd immunity most experts say we need at least 80% of the population vaccinated, evenly enough distributed across the population to avoid hot spots. In January, when the vaccination effort was ramping up, 47% of the adult population reported that they had already received a shot or intended to do so as soon as possible. As the following Kaiser Family Foundation (KFF) graph illustrates, this vaccine-ready share increased to 55% in February, 62% in March, and 65% in April. The good news Four months ago, racial and ethnic differences in vaccination acceptance were large but they have since narrowed and no longer pose a major obstacle to the vaccination campaign. According to KFF, vaccine refusal stands at 20% for African Americans, 19% for Whites, and 16% for Latinos. As of now, age differences are large, and some are likely to remain, but the rate of outright refusal among young adults makes a target of 70% feasible for this group. Not surprisingly, 80% of Americans ages 65 and older report that they have gotten inoculated or intended to do so very soon, compared to 50% of young adults ages 18 to 29. The good news is that only 24% of young adults say that they will not get vaccinated; the rest are waiting to see what happens. It seems likely that as more members of this group get their shots, peer pressure or effectively-targeted incentives will induce others to follow suit. The recent decision to make 12-to-15-year-olds eligible for the Pfizer vaccine further increases the share of the population that can get vaccinated. The final challenge But now that we are in the endgame, the pace of the increase is slowing significantly and it looks like getting the last 20% vaccinated will prove harder than anyone thought it would be four months ago. The rate of decline in the "wait and see" group slowed significantly in April, which suggests that those who remain in the pool will be harder to persuade than those who have left it. Of this group, some say that they would get their shots if "required" to do so. But both government and the private sector have shied away from mandates thus far. In fact more than half the states have seen legislation introduced that limits the ability of employers (public and private) to require workers to be vaccinated. Vaccine "passports" are also very unpopular. A recent KFF survey found that concerns about safety rank highly, as does the fear that the vaccine was developed too quickly to have examined the full range of possible negative effects. Some refusers in the survey still believe that COVID-19 is not as serious as the experts claim, and others assert that because they have had the disease, their immune system adequately protects them. But education and partisanship account for the largest differences. Eighty-one percent of college-educated adults report that they have already been vaccinated or soon will be, compared to just 58% of non-college adults. Still, an additional 19% of those without a four-year college degree say that they are waiting to find out more, and only 22% are outright refusers. Partisan affiliation makes a difference, but it's hard to tell just how much. On the one hand, a Quinnipiac survey put the share of Republicans who won't get vaccinated at 45%, as did 47% in a Gallup poll. A New York Times analysis of county-level election results found a strong correlation between vaccine refusal and the share of the vote for President Trump. On the other hand, in its April survey KFF found that of the 45% of Republicans who haven't yet been vaccinated, almost half are waiting to see rather than refusing outright. If most of the wait-and-see Republicans end up getting inoculated, the share of vaccinated Republicans could hit 70%, compared to about 90% for Democrats. Survey results for the major elements of the Republican coalition—white evangelicals, rural Americans, and whites without college degrees—are consistent with this estimate. We're learning Behavioral economists have found that as transaction costs (money, time, effort, and the like) of acts decline, individuals are more likely to perform them. Although COVID-19 shots are free, they often required long drives and waits in the earlier stages of the campaign. States, localities, and the federal government are responding by reducing their emphasis on mass inoculation centers and setting up smaller sites closer to communities whose vaccination levels have lagged behind. In addition, local pharmacies are being urged not to require registration and to accept walk-in patients. Recently, President Biden announced a deal with Uber and Lyft, the two big ride-share companies, for free rides to vaccination sites. As noted earlier, evidence suggests that most Americans would resist outright mandates to get vaccinated, whether from the government or the private sector. Employers fear that requiring shots as a condition of employment would lead to litigation and reduce their chances of rehiring laid-off workers. Carrots may work better than sticks, however. Two weeks ago, West Virginia Gov. Jim Justice announced a program to give young adults $100 savings bonds if they get vaccinated. To the consternation of nutritionists, Krispy Kreme announced it would give a free donut per day to anyone showing proof of vaccination. Budweiser is offering a free beer to vaccinated individuals (proposed slogan: a shot and a Bud.) Recent research suggests that they are on the right track. Randomized survey experiments by the UCLA COVID-19 Health and Policy Project found that cash payments increased the reported willingness to get vaccinated, as did the prospect of no longer having to wear face masks. These results held across racial, ethnic, and partisan differences. The final option is persuasion. Focus groups indicate that testimonials from politicians do not work, even for Americans who support them. Although doctors, nurses, and other healthcare providers are regarded as the most credible sources of information, only one-quarter of vaccine-hesitant Americans have consulted these sources. A national mobilization of providers could increase this number substantially. According to KFF data, experts in the CDC, state and local health departments, and pharmacies are more trusted by Blacks and Hispanics than by white Americans. After extensive field research, the nonpartisan Covid Collaborative and the Ad Council determined that most Americans regard getting vaccinated as a personal choice, not a duty. Accordingly, they have adopted "It's up to you" as the slogan for their public information campaign while stressing the personal benefits of inoculations, such as long-deferred face-to-face reunions with parents and grandparents. By contrast, the Biden administration has chosen a more civic-minded slogan, "We Can Do This," which may turn out to be less appealing to Americans who mistrust government or Democrats. John Bridgeland, CEO of the Covid Collaborative, says that "Our campaign [with the Ad Council] is reaching a population that is more difficult for the government campaign to reach." Within the next few months, we will find out whether he is right. This posting includes an audio/video/photo media file: Download Now

What pre-pandemic job trends suggest about the post-pandemic future of the capital region Posted: 12 May 2021 07:52 AM PDT By Jaclene Begley, Leah Brooks, Brian J. McCabe, Jenny Schuetz, Stan Veuger While the long-term economic impacts of the COVID-19 pandemic are still uncertain, the sharp increase in remote work has raised some fundamental questions about the geography of jobs and the demand for both housing and commercial real estate. If professional workers who drive the demand for premium-location office space remain working from home, it could have profound impacts on downtown business districts. Dense clusters of office jobs have traditionally brought in customers for nearby businesses like coffee shops, restaurants, and dry cleaners. If remote work (or a hybrid model) persists, it could have ripple effects throughout regional labor markets and commercial real estate, as well as altering where workers choose to live. In our forthcoming report, we examine the geography of jobs in the Washington, D.C. region prior to COVID-19, with an eye toward understanding how the pandemic could change employment and commercial real estate throughout the region. Below, we highlight a few of our key findings. Downtown Washington, D.C. had the largest concentration of jobs prior to COVID-19 The capital region's jobs were highly concentrated near its central business district (CBD), which we approximate as the area within 5 kilometers of the White House. This area encompasses most of central Washington, D.C. and some close-in parts of Arlington, Va., including Rosslyn and the Pentagon. The inner core had an employment density of more than 9,000 jobs per square kilometer (Figure 1)—more than four times the density of further-flung neighborhoods. The District is home to 20% of the region's jobs, but only 10% of the region's workforce.  Downtown Washington, D.C. offers location advantages to both employers and workers. The region's hub-and-spoke rail system was designed to channel commuters from suburban residential areas into the CBD. Because downtown is roughly in the geographic center of the region, it is reasonably accessible from all directions. Job-rich areas attract still more jobs, offering new firms access to existing businesses, customers, and amenities. Offsetting these employment centralization and density advantages is the fact that downtown office and retail rents are higher than in other parts of the region. Similarly, streets, sidewalks, and public transit can become congested, especially during peak commuting times. The capital region has several large suburban job clusters outside downtown, which track closely to major highways. The largest suburban job centers include Tysons Corner and Reston in Fairfax, Va., and the northwest corridor along I-270 in Montgomery County, Md., between Bethesda and Gaithersburg. White-collar industries drive the capital region's economy Although the Washington, D.C. region is famous as the seat of the federal government, the government is not the region's largest industry. Rather, the largest share of workers is employed in professional and business services, a category that includes law, finance, consulting, and a variety of other fields. (Notably, this also includes companies that contract for government agencies.) The capital region employs more workers in both professional services and government than the U.S. as a whole (shown by the red lines in Figure 2). These industries tend to employ more college-educated workers, pay relatively high salaries, and—salient during the past year—can more easily be performed remotely. Not all parts of the region have a similar employment mix. Figure 3 shows the industry composition for three large job clusters: Farragut North in downtown Washington, D.C.; Tysons Corner, Va.; and Rockville, Md. Farragut North has roughly equal numbers of workers in the region's two dominant industries (professional services and government), but also a substantial number of jobs in leisure and hospitality. The area includes many restaurants, bars, coffee shops, and hotels, which serve office workers, tourists, and business travelers. Rockville has the most balanced industry mix, while Tysons Corner is the most specialized, with a clear dominance of professional services and very few government jobs. Industry mix has implications for commercial real estate demand, especially if remote work continues as a longer-term trend. COVID-19 has decimated leisure and hospitality jobs The COVID-19 pandemic caused job losses in all sectors of the capital region's economy, but these losses were not equally distributed. The leisure and hospitality industry—which previously formed about 10% of the region's employment—saw the largest job losses, reflecting both new regulations and consumer preferences. State and local public health agencies placed restrictions on restaurants and bars, while risk-averse consumers have avoided congregating in shared indoor spaces like movie theaters. During the first few months of the pandemic, leisure and hospitality jobs fell to nearly half of their January 2020 levels. By the end of 2020, jobs had recovered somewhat, but were still well below pre-pandemic levels. A key question for economic recovery is when enough consumers will resume in-person gatherings—which will likely correlate with more widespread rollout of vaccines and subsequent updates to public health guidelines. Low-wage workers live farther from job clusters Job losses during the pandemic have hit low-wage workers the hardest, especially those employed in service sectors that cannot be performed remotely (e.g., food service). Low-wage workers were already at a disadvantage in housing markets because they cannot compete with higher-income households for desirable locations. Neighborhoods close to major job centers and with good public transportation tend to have more expensive housing—pushing many low-income workers to seek cheaper rents in inconvenient locations. Figure 5 shows that low-wage workers (those earning less than $3,333 per month) are more concentrated on the eastern side of the District, the inner ring of Prince George's County, Md., and the farther western exurbs. Commuting from these areas to dense job clusters such as Farragut North, Tysons Corner, and Rockville requires more time and money from workers. Proposed cuts to public transportation will create the most hardship for workers who cannot afford to own cars and those who work irregular or off-peak hours, when transit service is less frequent.  Our work habits will affect the future of cities, neighborhoods, and workers The past year has brought enormous uncertainty to workers, businesses, and policymakers about the future of work. Will highly educated professionals revolt if asked to return to daily commutes and rigid schedules? Can employers save money by reducing their office space and related expenses such as insurance, utilities, and supplies? Should local governments alter land use planning to accommodate "15-minute cities" that incorporate more commercial space in residential areas? Are downtowns as we know them finished? Will people flee urban areas altogether for more space in far-flung rural areas—or are people itching to return to face-to-face contact? While it's still too early to have much data on people's long-term preferences, our research suggests three areas to watch. First, in-person industries such as leisure and hospitality will take time to recover. Continuing uncertainty over when enough people will have been vaccinated to reach herd immunity makes it difficult to predict when consumers will want to fully re-engage with previous activities. And some workers in this sector may have moved on, geographically or into different jobs. Second, don't count downtowns out yet. The fundamental reason that draws businesses to CBDs and large employment subcenters still exists: Firms and workers are more productive when they locate close together, especially in "knowledge industries." It's hard to imagine congressional representatives and lobbyists choosing to hobnob indefinitely over Zoom instead of resuming in-person power lunches. Third, cultural institutions and amenities will still attract residents and tourists to the capital region. Even if a substantial share of highly educated professionals adopts a hybrid telework/in-office schedule, people will still want places to socialize and recreate outside their homes. Attractively maintained outdoor spaces such as the District's waterfront parks and the C&O Canal trail have been enormously popular during the pandemic. The Smithsonian museums aren't likely to move off the National Mall anytime soon. Local governments that want to retain residents who may have wider job options would do well to continue investing in high-quality public services and amenities that improve daily quality of life. This posting includes an audio/video/photo media file: Download Now

Tax carbon and consumption, not middle class income Posted: 12 May 2021 06:30 AM PDT By Ariel Gelrud Shiro On April 22nd President Biden kicked off a virtual Leadership Summit on Climate by declaring that the US will cut its global warming emissions in half by the end of the decade. This goal, as well as the summit, which included 40 world leaders, affirmed President Biden's commitment to combatting climate change during his tenure. Another proposal at the core of Biden's agenda is strengthening America's middle class. In  A New Contract with the Middle Class, Richard Reeves and Isabel Sawhill argue for removing almost all income tax for the middle class, and recovering part of that lost revenue with a carbon tax and a progressive value-added tax (VAT). This policy would give the middle class a much-needed income boost while helping us reach our goal of reduced emissions. The middle class is falling behind The middle class has experienced much slower income growth than both the affluent (who have seen rising wages) and the poor (who have been helped by an expanded safety net). The household incomes in the middle 60 percent of the distribution have grown only about half as fast as those in the bottom and top 20 percent, once taxes and transfers are taken into account (Figure 1). Wages are the main source of income for middle-class families – more so than for the affluent, who get some of their income from capital, or for the poor, who receive a much higher share of their income from government transfers. But wage growth in the middle and bottom of the earnings distribution has been sluggish in recent decades. Even as wages picked up among the poor and the well-off in the recovery from the Great Recession, growth rates were much lower for middle-class workers – and that was before COVID-19 cratered the economy. Between 1979 and 2019, the middle income quintile experienced 6% median wage growth compared to 31% for the highest quintile during the same period. Less upward mobility Part of the American contract is that each generation will rise on the shoulders of the one before. But, as Richard Reeves and Isabel Sawhill argue in A New Contract with the Middle Class, this promise is not being fulfilled. Nine-in-ten Americans born in 1940 ended up richer than their parents; for those born in the 1980s, the number is 50 percent. About a third of the mobility drop can be explained by slower growth, but the rest is the result of rising inequality. People have noticed. Only about one-in-three U.S. citizens believe today's children will be better off than their parents (and this was before COVID-19). For the full selection of charts and figures, see A New Contract with the Middle Class. Mobility during the working years has dropped, too. The chances of a middle-class earner (in deciles four through seven of the distribution) moving up to the top fifth of the earnings ladder, over a 15-year period, has dropped by 20 percent since the early 1980s. So in recent decades, the American middle class has experienced slow income growth, near-stagnant wage increases, and declining odds of upward mobility. "Inequality is not a feeling; it is a fact," argue Reeves and Sawhill. To help repair the economic contract with the middle class, we propose eliminating the income tax for most of the middle class. Eliminate the income tax for middle class households and introduce a carbon tax Given the economic trends described above, "the middle class deserves a tax cut." We propose eliminating income tax by raising the standard deduction for most middle-class families — specifically, any married couple making less than $100,000 a year or any single person making less than $50,000. This is an average tax cut of around $1,600 for middle-class families. It would also mean that for most Americans, "April 15 would be just another spring day," as Columbia law professor, Michael Graetz puts it. Taxes are important. They provide the resources for public goods to help those most in need and to invest in the future. Income tax accounts for about half of federal revenue. But some taxes are better than others. The burden should be shared fairly, and beneficial behaviors rewarded. To recover some of the lost revenue we proposed two taxes in the Contract; one on carbon and one on consumption. The carbon tax can help us better align our carbon emissions incentives as we work to combat climate change. Our colleagues estimate that a carbon tax starting at $25 a ton would generate roughly $1.4 trillion over a decade and cut emissions to about a quarter below 2005 levels. Some policymakers may be concerned about the distributional impact of a carbon tax given that low-income households tend to spend a larger share of their income on energy. To ensure that a carbon tax is progressive, it can be paired with a household rebate targeted at low-income families, which can easily be covered by the large amounts of revenue generated by the tax. When thinking about the distributional impact of a carbon tax, it's also important to note that there are health benefits accrued from reducing carbon emissions, and low-income households often disproportionately benefit from these health improvements. The health benefits from a reduction in air pollutants caused by a $25/ton carbon tax are in the order of 3,500 to 8,000 avoided cases of premature mortality and 90,000 cases of exacerbated asthma. The second tax we propose is on consumption. A well-designed value-added tax (VAT) can both generate much-needed revenue and also be equitable. We support a value-added tax (VAT) of 10 percent, which is about half the average rate in other OECD nations. As with the carbon tax, there are distributional concerns with a VAT. However, with a refundable tax credit for households and an exemption for small businesses, the VAT would still raise around $240 billion a year. Build Back Better Through a series of legislations, President Biden has shown that he is serious about his promise to build back better. The American Rescue Plan's stimulus checks, expanded child tax credit, and expanded Earned Income Tax Credit will help middle class families recover from the COVID-19 recession. The $2 trillion infrastructure bill is a good second step toward strengthening the middle class and combatting climate change. Some have called the American Jobs Plan a "climate bill" for its emphasis on expanding clean energy. But our proposal in A New Contract with the Middle Class will help the US further curb its emissions and achieve its ambitious environmental goals. As our nation continues to rebuild from the devastating pandemic, eliminating the income tax for most Americans and instead taxing carbon and consumption will help our climate and the middle class. This posting includes an audio/video/photo media file: Download Now

Indiana’s plan to use COVID-19 relief to uplift its struggling regions Posted: 11 May 2021 09:20 AM PDT By Mark Muro, Robert Maxim Last month, Brookings Metro detailed the American Rescue Plan's (ARP) appropriation of $350 billion in extremely flexible state, local, and tribal COVID-19 recovery funds. This unprecedented amount ensures that many of these governments will have abundant resources to deploy for addressing their biggest problems. Given those resources, now is the time for states, localities, and tribes to think big and act creatively on some of their hardest issues, whether it be closing opportunity gaps in job creation; supporting minority-owned businesses in underserved communities; advancing digital equity; empowering local real estate ownership in disadvantaged neighborhoods; expanding Medicaid; or boosting regional growth. Among such projects, a major new initiative in Indiana offers a compelling—and transferable—example of how to leverage ARP funds to make a big move on a tough issue. Indiana—like dozens of states—has struggled for years with both a serious job quality challenge and a deepening regional growth problem, characterized by uneven growth across the state's communities (see Figure 1). As discussed in a recent Brookings Metro report, Indiana needs to revitalize its drifting statewide advanced-industries sector and ensure that communities around the state participate in that revitalization. At present, smaller communities are too often not participating fully; instead, many of the state's regions—often anchored by manufacturing-intensive cities such as Gary, South Bend, Fort Wayne, and Terre Haute—have seen their slow or negative growth fall even more during the pandemic. So, what is Indiana's highly transferable response? In brief, state lawmakers are leveraging a major portion of the state's ARP funding to tackle regional inclusion at a truly meaningful scale through a $500 million grant program supporting 10 regions across the state. This new program is informed by various Indiana precedents, beginning with the Lilly Endowment's Strategic Community Advancement Initiatives, which have operated since 2007, and the state's 2015 Regional Cities Initiative. These initiatives converged with the ideas in Brookings's report and in Gov. Eric Holcomb's State of the State address this January, when he proposed a Next Level Regional Recovery program aimed at helping Indiana regions "develop strategies designed to improve quality of place, advance industry sector development, and grow workforce development initiatives." Initially, the Next Level grant program was funded at $150 million. By the time the budget deal was finalized in mid-April, the program had been renamed the Regional Economic Acceleration and Development Initiative (READI), and its budget boosted to $500 million—all of it funded by ARP. Now, the Indiana Economic Development Corporation (IEDC) is awarding up to $50 million per region to 10 regions across the state. These grants will support the implementation of strategies focused on enhancing regions' innovation ecosystems, entrepreneurship supports, talent attraction and development, and quality of life. The program is being kept quite simple, in a way that should enable relatively easy adoption by other states. Counties, cities, and towns can apply for $50,000 planning grants for their regions by midsummer. By the fall, each region must convene its stakeholders to develop a strategic development plan articulating a vision and plan for investment. And by year's end, funding decisions will be finalized. To be sure, greater specificity about preferred uses of the program's dollars might have been helpful to some regions (although others will likely appreciate the flexibility). With that said, the program guidance is admirably clear that it will fund not just physical assets, but also nonphysical initiatives such as talent development programs, public-private partnerships, workforce efforts, innovation voucher projects, and small business supports. Other states might make adjustments or add their own enhancements should they follow a similar strategy of large-scale grants to support regional revitalization. READI's rapid planning period and required 4:1 funding match (including a required 1:1 match from local government funding and a recommended 3:1 match from private and philanthropic sources) could prove challenging for some regions, especially smaller and more distressed areas most in need of community revitalization aid. How states interpret the newly released Treasury Department guidance on the use of ARP funds will have important implications too, such as determining which industries and communities have faced negative economic impacts due to the COVID-19 pandemic, as well as deciding whether relief funds can be used as match money. States will also need to design program milestones and funding matches that make sense for their communities. Likewise, state support for shared learning and peer exchange could help communities identify promising practices and improve implementation. For all that, though, Indiana's READI program impressively takes advantage of the opportunity the American Rescue Plan has given to states and cities. By applying the flexible federal largesse into a strong vision, Indiana has gone big on one of the toughest challenges states face—and raised hopes for the next decade. This posting includes an audio/video/photo media file: Download Now

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