Bloomberg, with comments: Europe’s Winter Gas Shortages Set to Last at Least Until 2025

The economic blowback from the Ukraine war, and cold war with China - is HUGE.

The blowback from the global economic war against Russia and China grows much larger, especially for Europe, and so-called emerging market nations as well. A recession is now certain for them, and increasingly likely in the US too. All to stop Russia from blocking Ukraine's entrance into NATO.

The Bloomberg article below this commentary details the degree of pain this conflict is inflicting. As far as I can see, no one working very hard to end it. Security considerations appear to have negated security in favor of NATO domination of Europe. The "domination" strategy -- which has long legs ever since the end of the second world war, has yielded what harvest, exactly?

The European Central Bank and Bank of England are now facing a serious double-digit energy/inflation crisis, and a virtually inescapable recession threat. A recession in Europe and the rest of the world will not spare the US. Indeed the strong dollar is rapidly raising borrowing costs for the rest of the world facing a crisis that will likely compel massive borrowing. 

The New PM in England, Elizabeth Truss, on her second day in office committed massive support to British households hit with energy costs that have increased nearly ten-fold. All with borrowed funds. The windfall tax on energy companies was rejected because it would disincentivize gas and oil resource investment at the same time there is no short term economic replacement for Russian natural gas.

All of these  are consequences of the proxy war with Russia over US and EU plans to recruit Ukraine into the NATO military alliance. I say "proxy, because the economic boycotts and sanctions, and gas shutoffs, have consequences far beyond and frankly even bigger than those on Ukrainian battlefields. 

Christine Lagarde's press conference

The official report of the ECB did not yet predict a recession. 

That omission brought laughter from several quarters, given the extremity of the energy crisis. However ECB chair Christine Lagarde responded to the laughter in her press conference today as if prepared for it. She confessed the published "base line" forecast as essentially optimistic, but noted that the ECB also had a "downside" forecast that was "grim", even "apocalyptic", and proceeded to enumerate dire risks if the war and boycotts and shutoffs extend -- or advance --beyond six months.

The energy corps and defense contractors are the big winners, so far. Everyone else should gird themselves for "demand destruction" -- a fancy term for layoffs and poverty, food and energy insecurity -- guaranteed to stop people from buying anything. However, the energy firms themselves are such concentrated and massive firms that windfall taxes on their skyrocketing wealth to pay for the costs apparently cannot be contemplated. 

A socialist would be inclined to say: "Let's nationalize the "too big to fail" energy firms and be done with the endless blackmail to Exxon  et al profits. It is tempting to suspect very cynical geopolitical plotting to some of these firms.

The invasion of Ukraine by Russia was not justified according to my understanding and support for Benjamin Franklin's outlook on foreign policy and war ["I never saw a good war, nor a bad peace" -- that from a veteran soldier, revolutionary, AND peacemaker] . 

But neither was it unprovoked. I am neither a Ukrainian, nor Russian. Further, I live in a country of routine mass and schoolhouse slaughters, staggering inequalities and miscarriages of justice, and am not inclined to pre-judge or lecture other countries on their alleged bad or criminal behavior. 

To my friends on the left who affirm an absolute right of a nation to self- determination, regardless of regional or global security considerations, and therefore have joined hands with imperialism to "liberate Ukraine", I see no road to peace in that stance and no road to "self-determination" of any kind. 

If one joins hands with imperialism to pursue what looks like virtue, he will end up losing his arms and legs too. Truth is the first casualty in war reporting, but where is an example of the US "liberating" anyone since WWII? It this is one, it would be the first. Without new, updated regional security, the US led liberation of Ukraine, and the hoped for overthrow of the Russian government, there will more likely result in a holocaust than self-determination for anyone.

Marxism and Self-determination

On the question of self-determination, many rose to cite V.I. Lenin's extensive remarks on this subject, which I just re-read. Putin has criticized these remarks for things they do not actually say. Some US Marxists have defended them, too, for things they do not actually say. An Odd correspondence. 

Lenin's intent was -- to refute Rosa Luxemburg's efforts to limit the right of nations to self determination, subject to whether the nationalistic  movements were socialist, or not. 

Since the Marxist conception of nations is entirely subordinate to their historic evolution as bourgeois organizations of society, Lenin argued it would be absurd to see them as having any other than a bourgeois state for their objectives, suited to bourgeois relations of production and politics. On the other hand, he says nothing on the "rights" to join military blocs and disrupt regional security. Indeed, the latter assertion seems irrelevant to the point the master Marxist was trying to make. 

I believe, however, it was George Washington. who said, near-about from memory, "in matters between nations, interests rule". Not, primarily, a moral "good" or "bad". quality to either friendships or conflicts between personalities. Whatever may be said of the invasion --- a horrendous, likely global economic bomb is now ignited by the US led boycotts and sanctions counter-attack. . The latter will create existential circumstances in numerous EU countries.

A massive failure of diplomacy needs to be corrected.

A massive failure of diplomacy permitted this war to start. Understanding interests, as well as ideal principles of a given nation or culture, is the key to giving diplomacy its best chance at deals that preserve and protect each party's existential interests. Even when diplomacy fails, the peacemakers' role and mission, especially in a nuclear armed world, must be redoubled in order to avoid 'apocalypses'.

The conflict in Europe is not unrelated to US attempts under both Trump and Biden to overthrow Chinese sovereignty in both Hong Kong and Taiwan. The sovereignty of China in both cases is affirmed in numerous treaties and signed documents. China has shutdown of US incited separatist agendas in Hong Kong and is plainly determined to do the same in Taiwan. What do the American people gain from subverting Chinese sovereignty? Who is threatened by who? And for what purpose -- other than "domination"? China has one foreign military base and 4 unarmed "offices", according to Google. The US has over 700, over 200 being well armed. 

The global economic and political war against Russia and China is the wrong strategy for these times. The pandemic, climate change, the proliferation of nuclear arms all call for aggressive "cooperation", not "domination" diplomacy. Russia and the world have mutual interests strong enough to achieve peace, to end the decades long expansion (to Putin--"aggressions") of NATO eastward, to devise new security frameworks that include, not exclude both Russian and Chinese participation, to end the global economic war which Biden falsely called "competition", to end militarization and occupation of Ukraine, and Russia's shut down of natural gas to Europe. All these goals demonstrate the urgent, imperative need for diplomacy and renunciation of domination policies on all sides.

Russia lit the match. But the global economic bomb has a recognizable "made in the US imperial" brand.

What is the price of this bomb? Inflation and recession. 

The FED has likely little choice but to sharply raise interest rates in the face of inflation steadily exceeding wage raises. It has and very few tools, to curtail inflation. Against the back drop of the war, and cold war, and sluggish asynchronous recovery from the pandemic related supply chain disruptions, raising rates will indeed "destroy demand", but the geopolitical conflicts may negate most of their impact on inflation.

 Biden's entire foreign policy seems oriented toward giving rebirth to 70 year old cold war alliances and frameworks dedicated to containing, repressing and destroying socialism in every form. These  alliances besotted with too many wars and failed interventions to enumerate, or to be credible as "defenders of human rights, or democracy". He seems determined to defy the slightest change in the essential post war US imperial position -- but in a much more multipolar world --: that peace is only possible if one nation is "dominant".

Such a position is, and has been, a cover for aggression. It mimics a Cartoon General's idea of peace through permanent war. It is difficult not to link the decades long NATO expansion eastward to the resurgence of Russian nationalism, which rose pretty much in (counter) proportion. The destruction of Russian socialism under the title of "the Washington Consensus" was a primary objective of the Bush and Clinton administrations following the collapse of the USSR. Indeed, the so-called "Oligarchs" were a direct corrupt result of Clinton inspired policies designed to destroy state economic ministries in Russia, deny Russia NATO membership, and open it to the mercies of US neoliberal investment. Ditto, really, the plan for Ukraine. By "neoliberal" I mean the proposition that the US is the worlds greatest democracy and that systems of bourgeois dominated political "democracies", like the US, are the only worldly perfection path permissible..


Now President Zelensky is calling for limited nuclear war. The rights and wrongs of the Ukraine war can be debated for years, but a a diplomatic failure of massive proportions need not be followed by an even bigger one. Biden and Putin, aided by any and all third parties, must move toward diplomacy.

 The power of energy becomes the central question of global political power and hope for stability. I will include links to LeGarde, PM Truss, and a lengthy interview with Fed Chair Powell on both forecasts and ideology around these moves.

john

*********************************************

Christine Lagarde's press conference

Chair Powell Remarks

Liz Truss Remarks

*********************************************

Next Winter’s Crisis May Be Even Tougher for EU: Energy Update

BLOOMBERG.COM

Next Winter’s Crisis May Be Even Tougher for EU: Energy Update

The European Union is set to intervene in energy markets to take the pressure off companies that are being squeezed by a liquidity crunch. It will also propose a clawback on excess profits by power and oil companies as it seeks to protect citizens from soaring costs.

Supply to remain tight until at least 2025 on LNG bottlenecks
Demand destruction is coming to Europe, energy executives say






While European politicians are focusing on the region’s survival this winter, next year could be worse.

The loss of Russian natural-gas supplies will cause reserves to be depleted faster when temperatures drop in the coming months and make the process of preparing for following heating seasons even more difficult. With no quick fix available, the strain is set to last until at least 2025, according to energy executives.

“Europe could have an even bigger problem next winter,” Niek Den Hollander, chief commercial officer at German energy giant Uniper SE, said in an interview at the Gastech conference in Milan this week. “It is possible that nations won’t be able to fill up storage sites next summer as much as we have managed to do this year.”


Europe is gripped by its worst energy crisis in 50 years as Russia slashes deliveries in retaliation for sanctions imposed over its invasion of Ukraine. With prices soaring, the squeeze has intensified a cost-of-living crisis and pushed economies to the brink of recession.




Europe’s leaders are dealing with the near-term pain and have earmarked more than 300 billion euros ($297 billion) to take the sting out of soaring energy costs this winter. But they face a reckoning when those measures expire and there’s still no relief.


“It’ll be somewhere between 2025 and 2027 that we’ll see the prices in Europe coming back to where they were at the beginning of 2021,” Ed Morse, global head of commodities research at Citigroup Inc., said in a Bloomberg TV interview. Capacity for exporting liquefied natural gas “doesn’t grow overnight.”

Read more: EU to Consider Emergency Power-Use Cuts, Price Caps, Profit Grab

After decades building up its reliance on Moscow, the region now faces a painful reset, with strapped consumers forced to rein in usage and businesses cutting output.

“This is going to culminate in demand destruction,” said Charif Souki, chairman and co-founder of LNG developer Tellurian Inc. “People will have to change the way they live. You will drive your car less often, you will turn on your heating less often, you will turn on your lights less often, and you will have to live with industrial production that is curtailed.”

Coping With Gas Cuts

European gas demand falls this year despite higher usage in power


Source: Wood Mackenzie

*Aggregated 7-day average for Belgium, France, Germany, Greece, Italy, Netherlands, Poland, Portugal, Romania, Spain, UK


The key problem is that Russian gas -- which last year covered about 40% of European Union demand -- can’t easily be replaced. After Gazprom PJSC cut flows through the Nord Stream pipeline indefinitely over the weekend, supplies via Ukraine could be next.

“If the Kremlin’s end game is to completely starve central Europe of Russian gas supplies, then certainly transit via Ukraine is at risk,” said Laura Page, a senior LNG analyst at energy-data company Kpler.

The EU aims to discuss a price cap on Russian gas imports, part of an unprecedented plan to step into energy markets. President Vladimir Putin has already warned that Moscow won’t supply anything if the cap is introduced.

The standoff puts pressure on Europe’s leaders to diversify sources. Norway is now the main provider of Europe’s gas, but it doesn’t have capacity to fully offset supplies from Russia. Other nearby suppliers such as Azerbaijan and Algeria face some similar bottlenecks.

Filling the Gap

LNG and Norway replaced Russia as Europe's top gas provider this year


Source: ICIS



LNG, which can be carried by ship from far-away producers such as the US and Qatar, is a promising option. Germany -- among the countries most exposed to the loss of Russian deliveries -- is pushing to open its first floating LNG terminals in the coming months.


But import capacity is only one side of the problem. Global LNG production is already tight and increasing capacity takes as least three years, according to Colin Parfitt, vice president at Chevron Corp. Meanwhile, Europe has to fight with Asia for the existing volumes for the next couple of years.

With Europe facing a smaller pool of gas available, markets will remain tight for the foreseeable future.

“We will get back to a more normal situation, but it will take time,” Helge Haugane, senior vice president at Norwegian energy company Equinor ASA. “Volatility in prices is here to stay for longer.”

ean Baker: Will Remote Work Lead to International Competition for Professionals?

 via Patreon

Will Remote Work Lead to International Competition for Professionals? 

Contrary to the Washington Post, the Optimists Say Yes

The Washington Post ran a piece last week that raised the possibility that workers who are now working  remotely may see their jobs outsourced to countries with lower-cost  labor. It raised the possibility that this might lead to the same sort  of hit to jobs and wages that the rise in imports from China and  elsewhere gave to manufacturing workers.

The piece then tells readers:

“Many economists are optimistic that American workers will land on  their feet amid a gradual transition from a world in which they compete  with a few dozen locals for each new job to one in which they compete  with a few million professionals worldwide. But economists were  optimistic about Y2K-era globalization as well, and it seems wise to  keep a wary eye on the possible downside.”

While the second part of this paragraph is certainly true, most economists were very willing to ignore economics in arguing that massive imports from developing countries would not  reduce the pay of manufacturing workers, and less educated workers more  generally, the first sentence is a bit bizarre.

Exposing manufacturing workers to competition with their much  lower-paid counterparts in the developing world is a big part of the  upward redistribution of the last four decades. This had the effect of  both lowering the pay of less-educated workers, and reducing the cost in  the United States of a wide range of goods, from shoes and clothes, to  cars and steel.

More educated workers were the beneficiaries of this reduction in  costs. While their wages were not hurt by foreign competition, since  they were largely protected, their money went further since they could  now buy goods at a lower cost.

In this context, it is hard to imagine why anyone would consider it  “optimistic” that the pay of more educated workers, who are now working  remotely, will not be lowered by international competition. Such a  reduction in pay should mean that a wide range of services, such as  accounting, legal services, and medical services, can be provided at  lower costs. This will benefit the whole country, but especially those  workers who are not seeing their pay cut as a result of this  competition.

The reduction in pay for more highly educated workers should also  help reduce inflationary pressure in the economy. The highest 10 percent  of the population takes in almost 50 percent of personal income. If we can reduce this by just 5  percent, this would be equal to 2.5 percent of total income.

To understand the economic importance of this sort of hit to the  income of high-end earners, remember that many economists were going  hysterical about the inflationary impact of President Biden’s student  loan forgiveness program. By most estimates, loan forgiveness will  reduce the amount that people are paying on student loans by roughly 0.1  percent of GDP.

This means that a 5 percent reduction in the pay of high-end earners  would have 25 times as much impact in lowering inflation as the student  loan forgiveness had in raising inflation. If people think student loan  forgiveness is a big deal in raising inflation, then they should think  that the prospect of international competition for remote workers will  be an enormous deal in lowering inflation. Now, isn’t that optimistic?

Let me just add that I know that not all the people who will be hurt  by increased competition for remote workers are rich. But, as the old  saying goes, if you think you have a policy that does something useful,  without harming some people you don’t want to see harmed, you don’t  understand the policy. There is no way to lower incomes at the top  without hitting some people who are not at the top.

Having said that, we can and should also pursue policies that are more directly focused  on the very top, such as lowering CEO pay and eliminating the bloat in  the financial sector. But if you show me a policy whose impact will be  primarily to lower the pay of the top 20 percent of the workforce, I’m  an optimist and I’m for it. I’d love to hear from those economists who  say this is bad.

Perry Bryant: Historic Climate Legislation Passed (text only)

 Historic Climate Legislation Passed

by Perry Bryant

        The US Senate has historically been the place where climate legislation has died: cap and trade legislation in 2009, the Kigali Agreement phasing out hydrofluorocarbons, etc. Not this time. The Senate passed and President Biden has signed into law the Inflation Reduction Act (IRA), providing almost $370 billion in funding over the next ten years to significantly reduce America’s greenhouse gas emissions.  

        Princeton University’s Zero Lab projects that the IRA will cut the United States’ emissions by 40% by 2030. Without the IRA, our emissions would only have been reduced by 27% by 2030. The 40% cut in emissions puts the US close to meeting our Paris climate goals of a 50 to 52% reduction in emissions by 2030. 

        As important as these reductions in US emissions are -- and they are vitally important -- the IRA also reasserts American world leadership on climate issues increasing the chances (although there’s certainly no guarantee) that China, India and other countries will up their commitment to fighting the climate crisis during the upcoming November UN Conference of Parties in Egypt. 

        There’s a lot to the IRA. This article will summarize the major energy and environmental provisions and then provide some details on the tax credits that are available to individuals for purchasing an electric vehicle (EV) and the rebates available for retrofitting homes for energy efficiency.  

Energy Production

        For homeowners who install a solar array or a wind turbine, there is a 30% tax credit for the cost of installing these system, and that tax credit is available for the next ten years (until 2032). Battery storage, which currently does not qualify for investment tax credits, becomes available for the 30% tax credit in January and is also available over the next ten years. 

        Utility-grade solar, wind, geothermal, and batteries will also qualify for the 30% investment tax credit if the developer pays prevailing wages and has an apprenticeship program. These solar and wind projects can qualify for additional tax credits if they are located in “energy communities” that include brownfield sites, communities with high unemployment, and census tracts were a coal mine closed after 1999 or a coal-fired power plant retired after 2009. Altogether it appears that a facility could qualify for a 40% tax credit if it met all these add-ons including using domestically produced material in construction of the facility. 

        By 2030, the amount of solar energy produced in the US is expected to increase fourfold; wind energy threefold; and battery storage fourteen-fold. The IRA could well make the 2020s the decade of renewables. That is not too soon for addressing the climate crisis.

Electric Vehicles (EVs)

        Transportation is the largest source of greenhouse gas emissions in the country. Moving to electric vehicles (EVs) is an essential step towards reducing these emissions. During the negotiations on the IRA, Senator Manchin expressed concerns about providing incentives that would encourage EV purchases with batteries made in China and reliance on critical minerals mined in countries outside North America. The final version has significant restrictions on the EV tax credits that reflect his concerns about importing batteries and minerals from China and other countries.

        If you are considering buying an EV, or want to understand the restrictions on EV tax credits, the details of these tax credits are outlined at the end of this article. Both the tax credits and the restrictions on the EV tax credits are significant and may well impact how successful the EV tax credits will be in promoting the sale of electric vehicles.

Energy Efficiency

        The IRA revives a tax credit program for homeowners installing energy efficiency measures and establishes two new rebates to help pay homeowners to retrofit their homes to make them more energy efficient. The tax credit program, now called the Energy Efficiency Home Improvement Credit had lapse. The benefits are now made retroactive to 2022 although it will only pay 10% of the improvements. Beginning in 2023, the benefits increase to 30% and annual and lifetime caps are improved. 

The new rebate program promoting electrification (tax credits for electric heat pumps, e.g.) is income based. While one almost always wants higher income levels so more people qualify for these rebates, the income levels are not unreasonable, in my opinion. 

The second program – Home Owners Managing Energy Savings (HOMES) – provides enhanced benefits to low-income households, but is available to all households regardless of income. This program provides larger rebates depending on how much energy is projected to be saved from the retrofit. The details on all three of these energy efficiency programs, including eligibility guidelines and what will pay for (they are extensive) are at the end of this article. 

Both of these new rebate programs will be run by the state. The state will need to submit a draft program to the US Department of Energy for approval before benefits will be available. It is unclear how soon that will happen. By contrast the tax credit program, the Energy Efficiency Home Improvement Credit, is in effect now with enhanced benefits in 2023.

Just Transition

        As the country transitions away from coal and towards renewables for electric generation, there undoubtedly will be additional loss of coal mining jobs. One the best alternatives to mining jobs is to provide a true or just transition by creating good-paying manufacturing jobs. The IRA provides $10 billion in tax credits for manufacturing clean energy components such as solar panels, wind turbines, parts for EVs, etc. This funding through section 48C of the IRS tax code provides a 30% tax credit for manufacturing clean energy components, and $4 billion has to be spent in “coal communities.” This includes communities where a coal mine has closed since 1999 or a coal-fired power plant retired after 2009. Funding for a specific 48C project isn’t assured; funding is awarded on a competitive basis. This is a golden opportunity to diversify the state’s economy, particularly in southern West Virginia. One can only hope that state government and manufacturers take advantage of this once-in-a-lifetime opportunity. 

Methane Fee

        Methane is a very powerful greenhouse gas. Over a 100-year period, methane is 25 times more potent at trapping heat in the atmosphere than carbon dioxide (CO2). However, unlike CO2 which impacts the atmosphere for hundreds of years, methane dissipates in 10 to 12 years. So, reducing methane emissions can have some of the most immediate (in climate time) impact on global warming. 

The oil and natural gas industry is a top source of U.S. emissions of methane. They emit methane at every step in the production of oil and natural gas: drilling, processing, and distribution. 

        The IRA imposes a fee on methane emissions of $900 per metric ton beginning in 2024. The fee increases to $1,500 per ton by 2026. The fee only applies to large methane emitters, exempting small operators who emit as much as 60% of all methane emissions according to the Congressional Research Service. The IRA provides the oil and natural gas companies with $1.5 billion in grants and other incentives to help them reduce their methane emissions. And if companies can comply with an anticipated EPA regulation on methane emissions, they will be exempt from the methane fee. 

Environmental Justice

        The IRA contains numerous provisions supporting low-income communities and communities of color. Listed below are just two examples of the environmental justice provisions in the IRA. The Greenhouse Gas Reduction Fund sometimes referred to as the “Green Bank,” provides $27 billion in funding to EPA. These funds are intended to leverage private funding to develop low- and zero-emission projects. $20 billion will be available to nonprofit financing institutions, and 40% of these funds ($8 billion) must be invested in low-income and disadvantaged communities. 

        The Environmental and Climate Justice Block Grants provide EPA with $3 billion for environmental justice projects for disadvantaged communities. Eligible activities include pollution monitoring, transportation emissions reduction, and pollution prevention. 

Black Lung

        The tax on the mining of coal that historically funded the black lung program expired last year. The IRA permanently restores the tax on coal mining to fund the black lung program. 

 

Fossil Fuels

The IRA reflects Senator Manchin’s “all of the above” strategy for energy development. For example, the bill prohibits the Interior Department from approving renewable energy development on federal property over a ten-year period unless it also opens lands to oil and gas development. 

Specifically, in order for the Interior Department to issue rights-of-ways on federal property for solar and wind development, they are required to lease as much as 2 million acres onshore each year and at least 60 million acres offshore each year for oil and gas development. (Inside Climate News, July 28, 2022.) There is leasing reform along with this leasing. These reform measures include, “raising royalty rates and rental rates to hold a lease, eliminating non-competitive bidding, (and) raising bonding requirements.” (West Virginia Rivers Coalition, August 9, 2022.)

The IRA also provides enhanced benefits for carbon capture and storage (CCS). CCS is a technology that removes CO2 from emissions from the flue gases at coal- or gas-fired power plants or industrial facilities (e.g., cement or steel plants). CCS technology is not currently economically viable and demonstration projects have struggled or failed. The IRA increases the amount of tax credits that a company can claim from the current $50 per ton of CO2 to $85 per ton of CO2. 

Senator Manchin secured agreement from legislative leaders to also pass permitting reforms as part of his support for passing the IRA. At least two proposals for permitting reform have been suggested. One would move judicial review of the Mountain View pipeline from the 4th Circuit Court of Appeals to the DC Court of Appeals. The other would limit agency reviews under the National Environmental Policy Act to two years, and restrict judicial review once an agency has made a NEPA decision. 

Agriculture and Forestry 

        The IRA provides $20 billion to help farmers reduce and store greenhouse gases. There is an additional $14 billion to help rural electric co-ops to transition to renewable forms of energy production.

        The US Forrest Service will receive $1.8 billion to reduce fuel in the wildland-urban interface, as well as $50 million to complete an inventory of old-growth forest and to protect old-growth forest. 

Conclusion

        Whew. There is a lot in the IRA, and this review only touches on some of the more important provisions. One weakness of the IRA is that it does not require action by individuals or most industries. There are plenty of carrots in the IRA but few sticks. Developing the sticks will fall on President Biden’s shoulders. One can only hope that the combination of the IRA carrots and President Biden’s regulatory action will be enough to make the monumental transition away from fossil fuels to renewables; a transition that the International Energy Agency, the world’s energy experts, has called the most difficult in human history. 

In making this transition, the IRA is foundational. It is the most significant and comprehensive climate legislation ever passed by Congress. It creates the opportunity for the US to lead the world on climate reform and conceivably hold global warming to an increase of 1.5 degrees Celsius -- a very daunting challenge. But at least we have an opportunity to meet this challenge thanks to the IRA. 

Details on the EV Tax Credits

Currently, the tax credit for EVs is limited to the first 200,000 customers for each car manufacturer. Tesla and General Motors have already reached that limit and Toyota will shortly. The IRA eliminates this cap, but requires all EVs be assembled in the North America in order to qualify for the tax credit. Any tax credit that is available can be applied at the point of the sale, rather than waiting to file a tax return the following April.

        The EV tax credit in the IRA is up to $7,500 per vehicle, and is split equally into two buckets. The first bucket provides up to half of the tax credit ($3,750) and requires that batteries be manufactured or assembled in North America. In 2023, when the new EV tax credit becomes effective, 50% of the batteries have to be manufactured or assembled in North America. That increases over time until 2029 when 100% of the batteries must be manufactured or assembled in North America in order to qualify for the tax credit.

        The second bucket of up to $3,750 is contingent on where minerals used in the batteries are mined or processed. Beginning in 2023, 40% of these minerals (e.g., lithium, cobalt, and nickel) must be mined, processed or recycled in North America. This increases each year until 2027 when 80% of the battery’s minerals must be mined, processed, or recycled in North America. 

        It is unclear how quickly EV manufacturers can develop supply chains to meet these requirements. The US is heavily dependent on China for lithium-ion battery cells (80%) as well as graphite used for battery electrodes. EV manufacturers that can break this reliance on China will have a competitive advantage over EV manufacturers that are unable to do so. 

        There are also limits on the cost of the EVs and income limits on taxpayers who can qualify for EV tax credits. EV cars cannot cost more than $55,000 and SUVs and light trucks cannot cost more than $80,000 and still qualify for the tax credit. Additionally, individuals earning more than $150,000 and couples earning more than $300,00 do not qualify for the EV tax credits. 

        Used EVs sold by a car dealer also qualify for tax credits of up to $4,000 or 30% of the sales price, whichever is less. The sales price cannot exceed $25,000 and the EV must be at least two years old. Individuals who purchase a used EV cannot earn more than $75,000 (joint filers $150,00) a year. These tax credits take effect January 1, 2023.

Details on the Energy Efficiency Rebates

        There is one revived tax credit program for energy efficiency and two new rebate energy efficiency programs in the IRA. 

        The tax credit program, now called the Energy Efficiency Home Improvement Credit, had lapsed. It has been revived and made retroactive to 2022, although with only limited benefits: 10% tax credit on qualified efficiency measures with a $500 lifetime cap. Beginning in 2023, the tax credit increases to 30% and the lifetime cap on benefits is replaced with a cap of $600 per measure, and a $1,200 annual cap. Exceptions to these caps are included in the chart below.

        Eligible services and home improvements must be highly rated by Energy Star or other rating system, and include:

Heat pumps and heat pump water heaters ($2,000 credit)

Insulation and air sealing

Energy audits ($150 tax credit)

Energy-efficient HVAC systems (including furnaces, boilers, and central AC)

Electrical panel upgrades; must be at least 200 amps capacity

Energy-efficient windows and doors ($500 tax credit for doors)

The High-Efficiency Electric Home Rebate Program is one of the two new energy efficiency rebate programs. This one focuses on electrification. It provides rebates (not tax credits) to low-income homeowners for 100% of the amount listed below for installing electrical upgrades:

Heat pump water heater

$1,750

Heat pump for HVAC

$8,000

Electric stove or heat pump clothes dryer

   $840

Electric service upgrade 

$4,000

Insulation and air sealing

$1,600

Electrical wiring

$2,500

        Low-income homeowners are defined as households that earn less than 80% of the area median income as determined by the US Department of Housing and Urban Development (HUD) (see the chart below). Multi-family properties qualify if 50% of the residents meet this income requirement.

        Moderate-income households qualify for 50% of the maximum benefit listed above. For example, a moderate-income family could receive a rebate up to $4,000 for installing a heat pump. Moderate-income households are defined as earning between 80% and 150% of the area median income as defined by HUD (see the chart below). Households earning more than 150% of the median income do not qualify for rebates under this electrification program. Multi-family properties qualify if 50% of the residents meet these income requirements.

        According to the HUD website,[1] estimates for what 80% and 150% of the median income for West Virginia in 2021 for various household sizes are shown below. Please note that these are 2021 figures and will change. And they represent the best data available and should be considered estimates. 

Household Size

80% of the median income in West Virginia

150% of the median income in West Virginia

1

$33,750

$63,300

2

$38,600

$72,300

3

$43,400

$81,450

4

$48,250

$90,450

        The second energy efficiency program in the IRA is the HOMES program, and is a more traditional energy efficiency program. It provides rebates for the cost of a project depending on how much energy is saved through the project.

For retrofits that are projected to save 35% or more of the household’s energy, the rebates are $4,000 or 50% of the project costs, whichever is less. The benefits increase to $8,000 or 80% of the cost of the project whichever is less for households earning less than 80% of the area median income. 

For retrofits that are projected to save between 20% and 35% of the household’s energy, the rebates are $2,000 or 50% of the project costs, whichever is less. The benefits increase to $4,000 or 80% of the cost of the project whichever is less for households earning less than 80% of the area median income. 

For retrofits that achieve energy savings of at least 15%, they will receive “a payment rate per kilowatt hour saved…equal to $2,000 for a 20% reduction of energy use for the average home in the state.”[2] Benefits increase for households earning less than 80% of the area median income. 

Benefits from these two energy efficiency programs cannot be combined. Both programs will be run by the state. The state will need to submit a draft program to the US Department of Energy for approval before benefits will be available. It is unclear how soon that will happen.         

________________

[1] See https://www.huduser.gov/portal/datasets/il/il2021/2021summary.odn?inputname=STTLT*5499999999%2BWest+Virginia&selection_type=county&stname=West+Virginia&statefp=54.0&year=2021 

[2] I have no idea what this language means. But it is verbatim from the IRA statute.

Dean Baker on Industrial Policy

 a good essay on "industrial policy", otherwise known as planning -- :)

via Patreon

Thoughts on Industrial Policy

Dean Baker

There is much confusion surrounding the concept of industrial policy, starting at the definitional level. If we think of industrial policy as a set of policies designed to favor certain industries, then we are always doing industrial policy.

For example, the decision to have the government finance the construction of airports supports the airline industry, as well as air freight, just as the decision to build the highways 70 years ago supported the auto industry and the suburbs. We spend over $50 billion a year on biomedical research, which is a huge subsidy to the pharmaceutical and medical equipment industries.

In short, industrial policy is not an on-off switch. We are always practicing industrial policy; the only issue is which industries we choose to favor and how we structure the mechanisms.

Recent legislation approved by Congress, the CHIPS Act and the Inflation Reduction Act (IRA), have been seen as big steps in advancing industrial policy. While there is much positive in these bills, there are three important areas where the legislation falls short:

1) The ownership of intellectual property

2) The price of clean energy products supported through the IRA

3) The false promise of manufacturing jobs

These are taken in turn.

Ownership of Intellectual Property

The treatment of intellectual property in these bills, and in fact in policy more generally, is badly misguided. The government is quite explicitly funding research in a wide range of areas. However, it will allow the companies benefitting from this research to claim ownership of patents and other forms of intellectual property based on the research it has funded.

This is an absurd subsidy that could redistribute a huge amount of income upward in the decades ahead. It would be comparable to the government paying a company to build a factory, and then giving it ownership of the factory. While the absurdity of this sort of giveaway in the case of a physical product is apparent to anyone, for some reason, it seems natural that we have the government pay for research and then allow companies to gain patent monopolies or other forms of protection to control the product and sell it at a monopoly price.

There is a huge amount of money at stake in this. In responding to the pandemic, Operation Warp Speed gave Moderna close to $900 million to develop and test a coronavirus vaccine. It then allowed Moderna to keep control of the vaccine, adding tens of billions of dollars to its market capitalization and creating at least fiveModerna billionaires.

This sort of outcome should outrage anyone who cares about inequality. The idea that we only pay companies once for their work is not radical. If we pay for the research, then companies should not also be able to get control of the output.

Ideally, all the results of publicly funded research would be in the public domain. This means that anyone could produce a product based on the results, or build on the research to produce a better product. There are other rules that could still allow some further gain by those who did the work, such as compulsory licensing, or an agreement to accept shorter patent monopolies, but keeping the research in the public domain would be the simplest and most equitable route.[1]It would also be important to prohibit non-disclosure agreements by companies working on taxpayer supported research.

Keeping the Price of Products Low

While we want to keep down the price of all products wherever possible, this is especially true of the items being developed to slow climate change. In principle, we would like solar panels, electric car batteries, and other green products to sell at the lowest possible price.

Patent monopolies and other forms of protection push prices in the opposite direction. In many cases, the cost associated with patent monopolies can be a very large share of the price. This is especially true with prescription drugs where the patent is responsible for close to 80 percent of the price of protected drugs on average, and in some cases more than 99 percent.

The share of the price associated with patent protections with items like solar panels or batteries is likely to be considerably lower, since these products do involve a complex manufacturing process and more physical material than drugs. Nonetheless, patents and related protections could still raise the price of these items by 20 to 30 percent. Furthermore, locking up technologies behind patent protection may slow innovation, since other companies will have less access to it.

Since our goal in promoting clean technology is to have it adopted as widely as possible, as quickly as possible, we should very much want to see prices lowered by having all research in the public domain. If the price of solar panels would fall by 25 percent by eliminating any intellectual property claims, this would have the same effect in increasing demand as an additional government subsidy to purchasers of 25 percent of the sale price. This is a big deal.

The False Promise of Manufacturing Jobs

Much of the discussion around both the CHIPS bill and the IRA highlighted provisions in the bills that would lead to more manufacturing in the United States. The view that we should be seeking out jobs in manufacturing specifically, rather than jobs in other sectors of the economy, rests on a misunderstanding of the current nature of manufacturing jobs.

Historically, manufacturing had been a source of relatively good-paying jobs for workers without college degrees. Jobs in manufacturing paid substantially more than jobs in other sectors, after controlling for factors like age, education, and location. This is no longer true. The manufacturing wage premium has fallen sharply in recent decades, so that it is now close to zero.

Trade has been a big factor in the reduction of the manufacturing wage premium. The country lost millions of jobs to imports in the 90s and 00s. The jobs that remained often paid far less than the jobs that were lost. A big part of this story was the decline of unionization in manufacturing. In 1980, close to 20 percent of the manufacturing workforce was unionized. This had fallen to just 7.7 percent by 2021, only slightly higher than the private sector average of 6.1 percent.

Furthermore, there is little reason to believe that the return of manufacturing jobs will mean a substantial increase in unionized manufacturing jobs. From the recession trough in 2010 to 2021, the manufacturing sector added back over 800,000 jobs. However, the number of union members in manufacturing actually dropped by 400,000 over this period.

In short, our trade policies had a devastating impact on manufacturing workers and workers without college degrees more generally, but reversing these policies now will not help the problem. We want these workers to be able to get good paying jobs, but they are no more likely to find them in manufacturing than in any other sector. (It is worth noting that manufacturing employment is still more than 70 percent male.)

There is an issue about the need to have more domestic production for national security reasons, as well as protection against events like the pandemic. This point is true, but often exaggerated. Clearly there is a national security issue when most of our semiconductors come from Taiwan when a conflict with China could quickly choke off this source of supply. However, we could be reasonably comfortable importing semiconductors from Canada, Mexico, and many other countries.

The pandemic did disrupt imports from our trading partners, but we also had many domestic factories shut down during the pandemic. Furthermore, if we think of the range of potential disasters, certainly there are many areas in the United States where production could be stopped for extended periods by hurricanes, floods, or other extreme weather events. What we really need are diverse sources of supply, not just domestic production. A focus on domestic production that doesn’t recognize the need for a diversity of sources, will not create resiliency.

Conclusion – Better Industrial Policy Would be Good, but We Need to Approach it With Clear Eyes

There is much that is good in the recent legislation that has been touted as industrial policy. However, these bills have not been well-structured from the standpoint of reducing income inequality. They also won’t necessarily help to make the economy more resilient in the ways many have claimed.

Industrial policy cannot just be a mantra, whereby calling something industrial policy implies better outcomes. It has to be carefully designed to meet specific goals. If we want to reduce inequality and speedup the adoption of clean technology, we can do much better than the CHIPS Act and the IRA climate provisions.

[1]There would need to be some agreement on sharing research costs and findings internationally, but we already have this problem with the existing IP system. Patent obligations and related protections have been a major source of conflict in the negotiation of recent trade agreements

Louis Menand: American Democracy Was Never Designed to Be Democratic

American Democracy Was Never Designed to Be Democratic

The partisan redistricting tactics of cracking and packing aren’t merely flaws in the system—they are the system.

August 15, 2022

Louis Menand, 

The New Yorker

To look on the bright side for a moment, one effect of the Republican assault on elections—which takes the form, naturally, of the very thing Republicans accuse Democrats of doing: rigging the system—might be to open our eyes to how undemocratic our democracy is. Strictly speaking, American government has never been a government “by the people.”


This is so despite the fact that more Americans are voting than ever before. In 2020, sixty-seven per cent of eligible voters cast a ballot for President. That was the highest turnout since 1900, a year when few, if any, women, people under twenty-one, Asian immigrants (who could not become citizens), Native Americans (who were treated as foreigners), or Black Americans living in the South (who were openly disenfranchised) could vote. Eighteen per cent of the total population voted in that election. In 2020, forty-eight per cent voted.



Some members of the loser’s party have concluded that a sixty-seven-per-cent turnout was too high. They apparently calculate that, if fewer people had voted, Donald Trump might have carried their states. Last year, according to the Brennan Center for Justice, legislatures in nineteen states passed thirty-four laws imposing voting restrictions. (Trump and his allies had filed more than sixty lawsuits challenging the election results and lost all but one of them.)

In Florida, it is now illegal to offer water to someone standing in line to vote. Georgia is allowing counties to eliminate voting on Sundays. In 2020, Texas limited the number of ballot-drop-off locations to one per county, insuring that Loving County, the home of fifty-seven people, has the same number of drop-off locations as Harris County, which includes Houston and has 4.7 million people.

Virtually all of these “reforms” will likely make it harder for some people to vote, and thus will depress turnout—which is the not so subtle intention. This is a problem, but it is not the fundamental problem. The fundamental problem is that, as the law stands, even when the system is working the way it’s designed to work and everyone who is eligible to vote does vote, the government we get does not reflect the popular will. Michael Kinsley’s law of scandal applies. The scandal isn’t what’s illegal. The scandal is what’s legal.

It was not unreasonable for the Framers to be wary of direct democracy. You can’t govern a nation by plebiscite, and true representative democracy, in which everyone who might be affected by government policy has an equal say in choosing the people who make that policy, had never been tried. So they wrote a rule book, the Constitution, that places limits on what the government can do, regardless of what the majority wants. (They also countenanced slavery and the disenfranchisement of women, excluding from the electorate groups whose life chances certainly might be affected by government policy.) And they made it extremely difficult to tinker with those rules. In two hundred and thirty-three years, they have been changed by amendment only nine times. The last time was fifty-one years ago.

You might think that the further we get from 1789 the easier it would be to adjust the constitutional rule book, but the opposite appears to be true. We live in a country undergoing a severe case of ancestor worship (a symptom of insecurity and fear of the future), which is exacerbated by an absurdly unworkable and manipulable doctrine called originalism. Something that Alexander Hamilton wrote in a newspaper column—the Federalist Papers are basically a collection of op-eds—is treated like a passage in the Talmud. If we could unpack it correctly, it would show us the way.


The Bill of Rights, without which the Constitution would probably not have been ratified, is essentially a deck of counter-majoritarian trump cards, a list, directed at the federal government, of thou-shalt-nots. Americans argue about how far those commandments reach. Is nude dancing covered under the First Amendment’s guarantee of the freedom of expression? (It is.) Does the Second Amendment prohibit a ban on assault weapons? (Right now, it’s anyone’s guess.) But no one proposes doing away with the first ten amendments. They underwrite a deeply rooted feature of American life, the “I have a right” syndrome. They may also make many policies that a majority of Americans say they favor, such as a ban on assault weapons, virtually impossible to enact because of an ambiguous sentence written in an era in which pretty much the only assault weapon widely available was a musket.

Some checks on direct democracy in the United States are structural. They are built into the system of government the Framers devised. One, obviously, is the Electoral College, which in two of the past six elections has chosen a President who did not win the popular vote. Even in 2020, when Joe Biden got seven million more votes than his opponent, he carried three states that he needed in order to win the Electoral College—Arizona, Georgia, and Pennsylvania—by a total of about a hundred thousand votes. Flip those states and we would have elected a man who lost the popular vote by 6.9 million. Is that what James Madison had in mind?

Another check on democracy is the Senate, an almost comically malapportioned body that gives Wyoming’s five hundred and eighty thousand residents the same voting power as California’s thirty-nine million. The District of Columbia, which has ninety thousand more residents than Wyoming and twenty-five thousand more than Vermont, has no senators. Until the Seventeenth Amendment was ratified, in 1913, senators were mostly not popularly elected. They were appointed by state legislatures. Republicans won a majority of votes statewide in Illinois in the 1858 midterms, but Abraham Lincoln did not become senator, because the state legislature was controlled by Democrats, and they reappointed Stephen A. Douglas.


VIDEO FROM THE NEW YORKER

The Act of Coming Out


Even though the Senate is split fifty-fifty, Democratic senators represent forty-two million more people than Republican senators do. As Eric Holder, the former Attorney General, points out in his book on the state of voting rights, “Our Unfinished March” (One World), the Senate is lopsided. Half the population today is represented by eighteen senators, the other half by eighty-two. The Senate also packs a parliamentary death ray, the filibuster, which would allow forty-one senators representing ten per cent of the public to block legislation supported by senators representing the other ninety per cent.

Many recent voting regulations, such as voter-I.D. laws, may require people to pay to obtain a credential needed to vote, like a driver’s license, and so Holder considers them a kind of poll tax—which is outlawed by the Twenty-fourth Amendment. (Lower courts so far have been hesitant to accept this argument.)

But the House of Representatives—that’s the people’s house, right? Not necessarily. In the 2012 Presidential election, Barack Obama defeated Mitt Romney by five million votes, and Democrats running for the House got around a million more votes than Republicans, but the Republicans ended up with a thirty-three-seat advantage. Under current law, congressional districts within a state should be approximately equal in population. So how did the Republicans get fewer votes but more seats? It’s the same thing that let Stephen A. Douglas retain his Senate seat in 1858: partisan gerrymandering.

This is the subject of Nick Seabrook’s timely new book, “One Person, One Vote: A Surprising History of Gerrymandering in America” (Pantheon), an excellent, if gloomy, guide to the abuse (or maybe just the use) of an apparently mundane feature of our system of elections: districting.

We tend to think of a “gerrymander” as a grotesquely shaped legislative district, such as the salamander-like Massachusetts district that was drawn to help give one party, the Democratic-Republicans, a majority in the Massachusetts Senate in the election of 1812. The governor of the state, Elbridge Gerry, did not draw the district, but he lent his name to the practice when he signed off on it. (Seabrook tells us that Gerry’s name is pronounced with a hard “G,” but it’s apparently O.K. to pronounce gerrymander “jerry.”)

Gerry’s gerrymander was by no means the first, however. There was partisan gerrymandering even in the colonies. In fact, “the only traditional districting principle that has been ubiquitous in America since before the founding,” Seabrook writes, “is the gerrymander itself.” That’s the way the system was set up.


Partisan gerrymandering has produced many loopy districts through the years, but today, on a map, gerrymandered districts often look quite respectable. No funny stuff going on here! That’s because computer software can now carve out districts on a street-by-street and block-by-block level. A favorite trick is moving a district line so that a sitting member of Congress or a state legislator is suddenly residing in another district. It’s all supposed to be done sub rosa, but, Seabrook says, “those in the business of gerrymandering have a tendency to want to brag about their exploits.”





ADVERTISEMENT



You might think that you can’t gerrymander a Senate seat, but the United States Senate itself is a product of gerrymandering. One factor that determined whether a new state would be admitted to the Union was which political party was likely to benefit. We have two Dakotas in part because Republicans were in power in Washington, and they figured that splitting the Dakota territory in two would yield twice as many new Republican senators.

For there’s nothing natural about states. Portions of what is now Wyoming were, at various times, portions of the territories of Oregon, Idaho, Dakota, Nebraska, and Utah. Before 1848, much of Wyoming was Mexican. Before that, it was Spanish. We don’t have Wyoming because people living within the territory felt a special affinity, a belief that they shared a “Wyoming way of life,” and somebody said, “These folks should have their own state.” To the extent that Wyoming residents feel stately solidarity, it’s because the federal government created Wyoming (and two more Republican senators), not the other way around.

In the case of the House, reapportionment takes place every ten years, after the census is reported. When this happens, most states redistrict not only for Congress but for their own legislative offices as well. This means, usually, that the party in power in state government that year draws district lines that will be in place for the next decade. Republicans, when they are running the show, try to make it harder for Democrats on every level to win, and vice versa. And why not? It’s human nature.

Even the census, on which apportionment is based, is subject to partisan manipulation. Was it at all surprising to learn recently that the Trump Administration tried to interfere with the 2020 census in order to reduce the population in Democratic districts? Trump officials must have calculated that they had little to lose. If they failed (which they largely did, after the Supreme Court suggested that the Administration was lying about its intentions and officials at the Census Bureau pushed back), no harm, no foul. If they succeeded and someone called them out on it, what was anybody going to do about it? Administer a new census?

The name of the game in partisan redistricting is vote dilution. In a two-party race, a candidate needs only fifty per cent plus one to win. Every extra vote cast for that candidate is a wasted vote, as is every vote for the loser. You can’t literally prevent your opponents from voting. Even the current Supreme Court, which has hardly been a champion of voting rights since John Roberts became Chief Justice, would put a stop to that. So wasting as many of the other party’s votes as possible is the next best thing. And, in most states, it’s perfectly legal. The terms of art are “cracking” and “packing.”

You crack a district when you break up a solid voting bloc for one party and distribute those voters across several adjacent districts, where they are likely to be in the minority. Once it’s cracked, the formerly solid district becomes competitive. This is sometimes called “dispersal gerrymandering.”

When you pack, on the other hand, you put as many voters of the other party as possible into the same district. This arrangement means that their candidate will usually get a seat, but it weakens that party’s power in other districts. From a civil-rights point of view, districts in which members of minority groups are in the majority might seem like a good thing, but Republicans tend to favor majority-minority districts because they reduce the chances that Democratic candidates will win elsewhere in a state.


Partisan redistricting is why Republicans won five of Wisconsin’s eight congressional seats in 2020 even though Biden took the state. Biden carried the Fourth Congressional District, which includes Milwaukee, by fifty-four percentage points. Was that district packed? Not necessarily. The tendency of Democrats to concentrate in densely populated urban areas naturally tends to dilute their votes statewide. But partisan redistricting helps explain why Republicans won sixty-one of ninety-nine seats in Wisconsin’s State Assembly and ten of the sixteen contested seats in the State Senate. Wisconsin is justifiably considered a major success story by Republican redistricting strategists.

Partisan gerrymandering is also why, for most of the past half century, the State Senate in New York was Republican and the State Assembly was Democratic—a formula for gridlock, backroom dealing, and the inequitable distribution of resources. Seabrook explains that New York’s districting was solidified under a handshake agreement that gave each party control of the process for one legislative chamber. The parties therefore created as many safe districts for their candidates as possible. Seabrook calls New York a “criminal oligarchy” and notes that, between 2005 and 2015, at least thirty state officials were involved in corruption cases.

Eight years ago, by constitutional amendment, New York established a bipartisan independent redistricting commission and made partisan gerrymandering illegal. This cycle, the commission deadlocked, and the Democrats, who have a supermajority in both houses of the legislature, tried to build a loophole in the law and drew their own maps. The State Senate and congressional maps were promptly thrown out as illegal partisan gerrymandering by the New York State Court of Appeals, and a lower court presented new maps, which govern the 2022 elections. The result is that New York Democrats now find themselves competing with one another for the same seats. The new district lines may force one candidate to move in with his mother, in order to maintain residency. Chaos? Just business as usual in New York State government.

Understanding the gerrymander helps us understand what Jacob Grumbach, in “Laboratories Against Democracy” (Princeton), describes as a country “under entrenched minority rule.” Grumbach is a quantitative political scientist, and his data suggest that, although some state governments have moved to the extremes, public opinion in those states has remained fairly stable. What explains the political shift, he thinks, is that all politics has become national.

“The state level is increasingly dominated by national groups who exploit the low-information environments of amateurish and resource-constrained legislatures, declining local news media, and identity-focused voters,” Grumbach maintains. These national groups aim to freeze out the opposition, and redistricting is a powerful tool for that. “Antidemocratic interests need only to take control of a state government for a short period of time,” Grumbach points out, “to implement changes that make it harder for their opponents to participate in politics at all levels.”

Partisan redistricting often favors rural areas. Obviously, the Senate and the Electoral College do this, too. One thumb on that scale is what is called prison gerrymandering. There are more than a million incarcerated convicts in the land of the free. Except in Maine, Vermont, and D.C., none can vote. But in many states, for purposes of congressional apportionment, they are counted as residents of the district in which they are imprisoned.


ADVERTISEMENT



Seabrook says that seventy per cent of prisons built since 1970 are in rural areas, and that a disproportionate number of the people confined in them come from cities. Counting those prisoners in apportionment enhances the electoral power of rural voters. It’s a little like what happened after Emancipation. A Southern state could now count formerly enslaved residents as full persons, rather than as three-fifths of a person, and was reapportioned accordingly. Then it disenfranchised them.

Changing the Senate would require a constitutional amendment, and there is little chance of that. There is a movement under way to get states to pass laws requiring their Presidential electors to vote for whoever wins the national popular vote, which is a way of reforming the Electoral College system without changing the Constitution. This, too, is a long shot. Elected officials have no incentive to change a system that keeps electing them.

Suppose, however, that we went over the heads of elected officials and appealed to our lifetime-tenured Supreme Court Justices, who, wielding the power of judicial review (not mentioned in the Constitution), can nullify laws with the stroke of a pen and suffer no consequences? The Justices are not even required to recuse themselves from cases in which they might have personal involvement. No other democracy in the world has a judicial system like that, and for a good reason: it’s not very democratic.

But, precisely because they have no stake in the electoral status quo, the Justices might decide that gerrymandered vote dilution triggers, among other constitutional provisions, the equal-protection clause of the Fourteenth Amendment. It seems pretty clear that your right to vote isn’t very “equal” if someone else’s vote is worth more.


In 2016, the North Carolina Democratic Party, the watchdog group Common Cause, and fourteen North Carolina voters sued the state legislators who had led a partisan redistricting effort designed to create ten congressional seats for Republicans and three for Democrats. The case, Rucho v. Common Cause, was joined with a similar case from Maryland. In that one, it was Republicans who sued, contesting a redistricting plan that reduced the number of G.O.P. congressional seats from two or three to one. The North Carolina plaintiffs won in district court.

In 2019, however, the Supreme Court, in a 5–4 decision (Ruth Bader Ginsburg was still alive), vacated the lower court’s decision and ordered that the suits be dismissed for lack of jurisdiction. The Court’s opinion was written by Roberts, who has been a critic of expanded voting rights since his time as a special assistant to the Attorney General in the first Reagan Administration. Roberts did not deny that the partisan gerrymandering in North Carolina and Maryland was extreme; he simply ruled that federal courts have no business interfering.

Roberts invoked what is known as the political-question doctrine, arguing that the degree of partisanship in redistricting is a political, not a judicial, matter. It admits of no judicial solution. “Excessive partisanship in districting leads to results that reasonably seem unjust,” Roberts conceded. “But the fact that such gerrymandering is ‘incompatible with democratic principles’ . . . does not mean that the solution lies with the federal judiciary.” The matter was deemed “nonjusticiable.”

It might seem shocking that the Court could take cognizance of an undemocratic practice and then decline to do anything about it. But Rucho should not have been a surprise. In 1986, the Court said that gerrymandering could violate the Constitution, but it has never struck down a partisan gerrymander. The Warren Court’s famous one-person-one-vote cases, highly contentious in their day, culminated in Reynolds v. Sims (1964), which held that legislative districts for all state offices, including State Senate seats, “must be apportioned on a population basis.”

These cases made malapportionment illegal, but not gerrymandering. In fact, Seabrook thinks, the one-person-one-vote rule is responsible for what he calls “the Frankenstein’s monster of the modern gerrymander.” As long as district populations are equal, you can crack and pack all you like; you just need the right software, and the Supreme Court will look the other way.

There is one major exception, however. Federal courts will strike down a gerrymander intended to dilute the votes of racial minorities. You can redistrict by political party, in other words, but not by race. That is plainly barred by the Fifteenth Amendment and the 1965 Voting Rights Act. In Cooper v. Harris, from 2017, the Roberts Court invalidated a North Carolina districting plan on the ground that it grouped voters to weaken the minority vote.

Shouldn’t this approach extend to state voting regulations as well? Houston has a large nonwhite population (but will likely have only one drop box); Southern Blacks have a tradition of voting after church services on Sundays (but may no longer be able to do so); and nonwhites are more likely than whites to have to stand in long lines in order to vote (and thus be grateful for some water). Are these new regulations really race-neutral?

In 2021, in Brnovich v. Democratic National Committee, the Court upheld a new Arizona law making it a crime for anyone other than a postal worker, election official, caregiver, or family or household member to collect and deliver an early ballot—targeting a practice common in minority communities. The Democratic National Committee sued, claiming that the law had a disparate impact on, among other groups, Native American Arizonans, many of whom live on reservations that are distant from a polling place. The Court held that the restriction was legal. “Mere inconvenience,” it said, “cannot be enough” to demonstrate that a group’s voting rights have been violated.

Is the motive for redistricting partisan, or is it racial? In a nation in which race is often a determinant of party identity, this will be a tricky needle to thread. Still, the Court isn’t wrong to point out that there is a political solution to the movement to restrict voting rights. Under the Constitution, although the states prescribe the “Times, Places and Manner of holding Elections,” Congress “may at any time by Law make or alter such Regulations,” and thereby make voting easier. What do you think the chances are of that happening? ♦