I was looking at the April CPI this morning, and I got to thinking about Dropbox. I use Dropbox literally 25-50 times a day. I’m working on a file on my Apple laptop, save it to the Dropbox folder, and I can be sure that the same file will show up on my PC when I get home.

Dropbox costs me nothing for 2.5 GB worth of storage. More important, I’m getting a valuable service for nothing.

Now comes along Google Drive, which supposedly functions much the same way, and offers 5 GB of storage. Now, I’m not going to switch any time soon because Dropbox is working fine for me. But a reasonable interpretation here is that the “price” of seamless online storage has fallen.

But where does the fall in “price” of the Dropbox/Google Drive-type service show up in the Consumer Price Index? The answer: Nowhere. Free services such as Dropbox and Google Drive (or Facebook, or Yahoo Mail, or any other Web service without a price) do not affect the CPI, even as their usefulness increases.

This is not a new observation at all (see for example the 2009 working paper ”The Broadband Bonus: Account for Broadband Internet’s Impact on U.S. GDP” by Greenstein and McDevitt).

Yet this omission of free online services from the CPI, once insignificant, has become increasingly important as we spend more and more of our time online. What has the bigger impact on Americans–an increase in the price of “lunchmeats” (2.3% over the past year) or a decline in the price of online storage (arguably down by as much as 50%, though it is probably less )?

That’s a real question, incidentally, not a rhetorical one. We may have reached the point where Internet companies are providing free services that have a higher value than some things we pay for. How we change our economic statistics to reflect this new reality?

Late yesterday marked a formal end to the two-year debate on whether the Export-Import Bank (Ex-Im), the U.S. export credit agency, deserves to live to see another day. (It does.) What was once a routine process for Ex-Im reauthorization was held back by congressional charges of corporate welfare by the Tea Party. But while the decision to reauthorize the Bank for another two and a half years is good, the fact that it took so long is not: at this rate negotiations for the next round will have to begin before this legislation is finalized. That is a heavy drain on congressional and Ex-Im Bank resources. One has to ask, is there a way to avoid the same extended debate next time around?

Yes, with a little more clarity on why two-year long ideological attacks on Ex-Im creates uncertainty that hurts U.S. companies and detracts from Ex-Im’s effectiveness. As someone who worked at the Bank for almost three years, I’d like to offer some of that clarity.

Ex-Im operates in a competitive global marketplace where other export credit agencies will be happy to help their companies win the deal. If financing becomes problematic to secure, we risk foreign buyers going elsewhere, especially when it comes to big-ticket items and long-term project finance. Just think: if you were building a multi-billion dollar aluminum smelter would you want to risk the delivery of your power generators and the success of the project? If you were purchasing a new fleet of 18 jumbo aircraft to be delivered over the next three years wouldn’t you pick the manufacturer that comes with secure long-term financing? It’s only natural that a delayed reauthorization, which this time ran eight months beyond the Bank’s expiration date, will cause uncertainty for potential foreign buyers. Why buy U.S. when you don’t even know if your financing source will be around next year?

It’s been a turbulent last few days on the campaign trail. On Tuesday, Indiana Republicans drove six-term Sen. Richard Lugar from office in favor of hard-core conservative state treasurer Richard Mourdock. While Lugar’s loss seemed inevitable well before primary day, the margin of his defeat—61-39—was shocking given his relatively conservative voting record over decades, and his staunch orthodoxy over the usual hot-button issues like abortion and taxes. Mourdock’s many out-of-state backers, including the Club for Growth, Jim DeMint’s Senate Conservative Fund, and virtually every right-wing blogger on the planet, made it abundantly clear that getting rid of Lugar was intended to teach the national Republican Party a lesson about the price involved in disrespecting the Tea Party Movement (Lugar had never even attempted to pander to them) and sticking to the outmoded traditions of Senate bipartisanship.

The day after the primary Mourdock reinforced the “lesson” by calmly telling Chuck Todd that he defined “bipartisanship” as “Democrats coming to the Republican point of view.”

While Indiana’s current pro-GOP tilt makes Mourdock a slight favorite in a general election contest with Rep. Joe Donnelly, the unexpected vulnerability of the seat has scrambled many early assumptions about the 2012 Senate election landscape, particularly when combined with Olympia Snowe’s recent surprise retirement. Today the Washington Post’s Paul Kane published an overview of Senate races quoting several leading handicappers as giving Democrats a slight edge in their battle to hang onto control of the chamber; it all may come down to the vice president’s tie-breaking vote.

The other election news on Tuesday was less dramatic. In Wisconsin, as expected, Milwaukee mayor Tom Barrett easily defeated former county executive Kathleen Falk to become the Democratic candidate who would succeed Scott Walker if he’s recalled on June 5. Falk’s labor backers—many of whom were deeply unhappy with Barrett’s treatment of public employees in Milwaukee-appear to be lining up loyally for the winner. Polling of the June 5 contest remains mostly too-close-to-call, though Walker will have a significant financial advantage thanks to massive funding from out-of-state conservatives and business interests.

In North Carolina, Democratic Lt. Gov. Walter Dalton used a big financial advantage and late momentum to defeat former congressman Bobby Etheridge for the gubernatorial nomination (embattled incumbent Gov. Bev Perdue decided not to run), though the Republican nominee, former Charlotte mayor Pat McCrory, is the early favorite for November. But the big national news from North Carolina was the landslide (61%) approval of Amendment One, a constitutional gay marriage ban that was worded in a way that would probably ban legal protections for civil unions and even heterosexual domestic partnerships as well. Polling showed the amendment might have failed had voters understood its scope, but despite losing in most of the state’s major urban centers, it won overwhelmingly in rural counties, helped along by last-minute ads featuring the state’s most famous citizen, the Rev. Billy Graham.

The job of the presidency has grown so large, so overwhelming in its power and responsibility, that no one human being can excel in all its many dimensions, from the ceremonial to the political, from making policy to managing a vast bureaucracy. In an atmosphere of bitter partisan division and a 24-hour news environment, presidents more than ever need help at the highest levels possible. Fortunately, there is a well-established yet greatly underutilized institution readily available to lend a hand: the presidential cabinet.

Although the cabinet and its role in government are not formally established in the Constitution, presidents since George Washington have convened a collective body of the heads of the executive departments. Washington used cabinet meetings to tap into the wisdom of such luminaries as Secretary of State Thomas Jefferson and Secretary of the Treasury Alexander Hamilton. In her 2005 book Team of Rivals, Historian Doris Kearns Goodwin demonstrated how the strong and diverse cabinet assembled by Abraham Lincoln girded the nation at its time of greatest peril. FDR convened his cabinet the day after the Pearl Harbor attacks, while JFK famously relied on a subset of his cabinet during the Cuban Missile Crisis.

Over the past half-century, however, the rise and expansion of the White House staff has centralized deliberation and decision-making increasingly within the confines of 1600 Pennsylvania Avenue. Between this reliance on professional staffers and life in the ever-more restrictive “security bubble,” presidents have had less and less direct access to a range of views and opinions. Indeed, while the Kennedy and Johnson cabinets met monthly, the Obama cabinet has met less than one-third as often.

Today, cabinet meetings are often little more than occasional photo ops to bring together POTUS, the VP, the heads of the 15 executive departments and a few other “cabinet-rank” officials such as the heads of the Office of Management and Budget and the Environmental Protection Agency, the Ambassador for the United Nations, and the U.S. Trade Representative. Virtually the only time they are seen together by the public is in the front row at the annual State of the Union Address.

By contrast, many of America’s democratic allies benefit from the much more central role played by their cabinets, particularly in parliamentary systems where they are critical partners in the governance of their nations. In countries such as the United Kingdom, Canada, Australia, and Germany, the executive leadership comprises an entire team of senior politicians who meet weekly to lay out political alternatives and strategize about policy implementation. In many parliamentary systems, the cabinet is considered so central that the members are all considered to share “collective responsibility” for the work of government.

Under the U.S. Constitution, the American president will always remain paramount, but both the president and the nation could benefit greatly by enhancing the role and strengthening the position of the cabinet. Below are five ideas to maximize the reach and impact of the president’s hand-picked first-string team.

Read the entire memo here

Recently, the Trustees of the Social Security and Medicare trust funds issued their annual report on the future of America’s entitlement programs. As usual, the news was bleak: Social Security is now expected to go bust in 2033, three years earlier than projected last year.

In their report, the Trustees also issued a sober warning: “Lawmakers should not delay addressing the long-run financial challenges facing Social Security and Medicare.”

Unfortunately, Congress doesn’t look like it’s up to the task, especially in an election year. Not too long ago, the House of Representatives overwhelmingly rejected—by a vote of 382-38—a bipartisan budget plan based on the recommendations of the White House’s deficit reduction commission that would have included some highly sensible steps toward entitlement reform.

But as long as Congress is stalling on tough decisions around this issue, why not let citizens take charge? Let retiring seniors choose the level of Social Security benefits they’d like to get—especially those comfortable enough to afford giving up some of their benefits.

Under this system, citizens can opt to “give back” $50, $100, $500 or more of the benefits they don’t truly need while also providing a direct mechanism for reducing the deficit while Congress sits on its hands.

PPI Chief Economic Strategist Michael Mandel, explains in The Atlantic the surprising link between the future GOP presidential nominee and the upcoming Facebook initial public offering.

“Mitt Romney and his fellow Republicans are gleefully pounding President Barack Obama for the weaker-than-expected employment report released on May 4. Growth seems to be weakening and Romney is positioning himself as the business-minded economy savior for the country.

“At the same time, the Facebook IPO, anticipated to value the company at more than $75 billion, is a tangible sign of the vast amounts of wealth and income being generated by the communications boom and the so-called App Economy. Smartphones, broadband wireless, social media, apps — all are combining to provide a potent force for economic growth.

“So the question is: Should Romney be worried about an “App Surprise” — a sudden acceleration of growth and job creation fueled by the smartphone/communications boom?

“That might seem unreasonable given the other drags on the economy. Yet Romney and his advisers would be wise to remember the events of the 1996 election campaign.”

Read the full article at The Atlantic

A new survey released today by Thumbtack.com gives more evidence that reforming regulations for new and small businesses at the state and local level could lead to valuable economic gains.

The survey, which assessed how “friendly” states and local areas were to new and small businesses, finds that those states with the friendliest climates had fewer licensing regulations and other legal hurdles that hindered business registration. In fact, the survey found small businesses viewed licensing requirements as almost twice as important as tax rates in determining how friendly a state was to its businesses. And states deemed the most friendly to business, including Texas, Idaho, and Oklahoma, were also the states where respondents claimed starting a new business was easy.

The survey, which received over 6,000 responses from small businesses across the country, was conducted by Thumbtack.com in partnership with the Kauffman Foundation. It found Texas was the friendliest state in the nation for small businesses, while California was ranked as the least friendly.

The Progressive Policy Institute hosted an economic forum to discuss the critical role of manufacturing in the era of the app economy.

PPI Chief Economic Strategist Michael Mandel presented the findings of his new paper, “Manufacturing in the Age of the App Economy: How Many Factory Jobs Should We Aim For?”, co-authored with PPI economist Diana G. Carew.

The panel included Michael Mandel, Jared Bernstein, Leo Hindery and Louis Uchitelle, who discussed the critical role manufacturing plays in today’s app-fueled economy. There was debate regarding the best tools and policy options available, and the consensus that emerged was that the federal government must refocus and redouble its efforts to promote American manufacturing and make it more competitive. By creating a smart manufacturing agenda for the 21st century, we can add balance to our economy and put America back on the sustainable path of producers, not consumers.

An explicit jobs target is the first concrete step towards achieving that goal. PPI believes we should aim to boost manufacturing employment up to 15.5-16 million, a level last reached in 2001. The employment spillover effects of manufacturing are also significantly larger than commonly thought, so more manufacturing jobs would create more jobs elsewhere as well. With unemployment still unacceptably high, the imperative to act has rarely been more clear.

Download “Manufacturing in the Age of the App Economy: How Many Factory Jobs Should We Aim For?”

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The presidential contest executed a rare turn into foreign policy this week, with a flurry of controversy around the first anniversary of the killing of Osama bin Laden.

Having already made it clear that he would not be shy to claim this event as a personal and administration success story, the president and his team upped the ante with a web video (narrated by Bill Clinton, no less) that noted a 2007 remark by Mitt Romney dismissing any focus on the pursuit of bin Laden as a waste of time and money (Romney was at the time supporting the Bush administration’s “wider war on terror” policy and also responding to criticism from Democrats—including Obama—that the administration had diverted vital resources from Afghanistan in order to prosecute a failed war in Iraq). Romney and other Republicans reacted angrily to the ad, suggesting that Obama was “politicizing” the operation that killed Osama, and arguing that “even Jimmy Carter” would have given the order to proceed with it. After some shots back and forth, the president’s surprise trip to Afghanistan, and televised address on a new security pact with the Afghans, seem to have convinced Republicans they were simply drawing fresh attention to Obama’s top national security accomplishment, and so sought to change the subject.

The sudden activity on foreign policy also helped draw attention to an internal Romney campaign problem reflecting the presumptive nominee’s sensitive relations with social conservatives. A couple of weeks ago the campaign announced that Ric Grenell, a veteran foreign policy hand who had served with as a top aide to former U.N. ambassador John Bolton during the Bush administration, would be Romney’s principal spokesman on international issues. More importantly in terms of symbolism, Grenell is openly gay and has publicly advocated legalization of same-sex marriages.

The hiring announcement immediately drew fire from prominent Christian Right figures, and Grenell vanished from sight, which was widely noticed thanks to this week’s back-and-forth on the Osama anniversary. Yesterday Grenell let it be known through Washington Post conservative blogger Jennifer Rubin, who is very close to the Romney campaign, that he had resigned because of the heat and the apparent unwillingness of the campaign to defend him. The campaign subsequently defended itself on grounds that Grenell’s employment wasn’t even effective until May 1, and dropped broad hints that he was grandstanding to advance his own “gay politics” agenda. The whole brouhaha was an unhelpful distraction for Team Romney.